Enter what you risk, what you aim to make and what each trade costs. You get the reward to risk ratio, the win rate you need just to break even, and what your win rate earns per trade and over 100 trades.
How it works
Reward to risk. The target divided by the stop, both in dollars. A $400 stop with an $800 target is 2:1, also written as 1:2 risk to reward. Fees shrink every win and grow every loss, so the net ratio is lower.
Break even win rate. Risk plus fees, divided by risk plus reward. At 2:1 with no fees you break even winning 1 trade in 3 (33.3%), and fees push that line up.
Expectancy. Your win rate times the net win, minus your loss rate times the net loss: what an average trade is worth. It is shown in dollars and in R, where 1R is the amount you risk. Above zero, the trades make money over many tries.
Example
Risk $400 to make $800 with $15 of fees a trade: a win nets $785 and a loss costs $415, a net ratio of 1.89. You break even at a 34.6% win rate. Win 40% of your trades and each trade is worth $65.00 on average (0.16R), $6,500 over 100 trades. Win 30% and the same trades lose $5,500 over 100.
Questions
What is a good risk reward ratio?
There isn't one number. A bigger target needs fewer winners: before fees, 1:1 breaks even at 50%, 2:1 at 33.3% and 3:1 at 25%. What matters is whether your real win rate at that ratio clears the break even line, so measure it over many trades.
How do I calculate the risk reward ratio?
Divide the distance to your target by the distance to your stop. A 20 point stop with a 40 point target on NQ is 2:1, whatever the number of contracts.
Why does the break even win rate include fees?
Commission and slippage are paid on every trade, win or lose. On small targets they take a big share: $15 of costs on a $100 target with a $50 stop moves break even from 33.3% to 43.3%.
Is 1:2 risk to reward the same as a 2:1 reward to risk?
Yes. Both mean you risk 1 to make 2. This calculator shows reward to risk, so a higher number is a bigger target.
How do I find my real win rate?
Count it over many trades taken the same way. In ChartTrainer every practice trade lands in the journal, and Progress shows your win rate, average win and average loss.