How to use the Risk Reward Calculator
- Choose buy or sell.
- Enter the entry, stop, and target exactly as planned.
- Enter the amount of money you are risking.
- Check the R multiple and potential reward.
- If the output is invalid, the stop or target is on the wrong side of entry.
Formula
Risk distance = absolute Entry - Stop
Reward distance = absolute Target - Entry
R multiple = Reward distance / Risk distance
Potential reward = Risk amount x R multipleExample
A buy at 1.08450 with a stop at 1.08150 risks 30 pips. A target at 1.09100 offers 65 pips, or 2.17R.
What to watch
- A high R multiple does not make a low-quality setup good.
- A smaller target can still be valid when win rate is high and execution is clean.
- Always compare R multiple with actual historical behavior, not only chart distance.
Frequently asked questions
What does 2R mean?+
It means the planned reward is two times the planned risk. If you risk $100, a 2R target is $200 before costs.
What is breakeven win rate?+
For a 2R setup, breakeven win rate before costs is about 33.3%. Costs raise the required win rate.
Should every trade be 1:2 or better?+
No. The right R profile depends on win rate, execution quality, and strategy expectancy.