Compare the distance to a stop with the distance to a target. The result describes a plan, not the probability of a trading outcome.
What the result means
A risk-to-reward ratio of 1:2 means that the planned reward distance is twice the risk distance. The break-even percentage is 1 ÷ (1 + reward-to-risk), before costs. Neither number estimates your actual win rate.
For a long plan, the stop must be below the entry and the target above it. For a short plan, the stop must be above the entry and the target below it. The calculator checks these relationships.
Risk reward calculator FAQs
What does a 1:2 risk reward ratio mean?
The planned reward distance is twice the distance from entry to stop loss. For example, a price risk distance of 10 and reward distance of 20 gives 1:2, before costs.
Does the break-even percentage predict my win rate?
No. It is the mathematical win rate needed to break even at the entered reward-to-risk ratio, before costs. It does not estimate how often a strategy will win.