Risk to reward in one line
The risk to reward ratio compares what you stand to lose with what you aim to gain. If you risk $100 to make $200, the ratio is 1 : 2. The higher the reward relative to the risk, the lower the win rate you need.
The win rate you need to break even
| Risk : reward | Win rate to break even |
|---|---|
| 1 : 0.5 | 66.7% |
| 1 : 1 | 50.0% |
| 1 : 1.5 | 40.0% |
| 1 : 2 | 33.3% |
| 1 : 3 | 25.0% |
| 1 : 5 | 16.7% |
At 1 : 2 you only need to win about one trade in three. At 1 : 1 you must win half of them. These figures ignore fees. Costs raise the break-even win rate, especially for strategies with small targets.
Why no ratio is good on its own
A 1 : 3 target sounds great, but if the price rarely reaches it, the win rate may be 15% and the strategy loses. A 1 : 0.5 target sounds poor, but with a 75% win rate it can be very profitable. Compare your win rate with the break-even rate for your ratio. If your win rate is higher, you have an edge.
Expectancy puts it together
Expectancy per trade = win rate × average win − loss rate × average loss. A 40% win rate at 1 : 2 gives 0.4 × 2 − 0.6 × 1 = +0.2R per trade. The same 40% at 1 : 1 gives −0.2R. Read more in what is expectancy in trading.
How to set targets realistically
- Base targets on where price has actually travelled in similar situations, not on a ratio you want.
- Test your real win rate at your real ratio over at least 100 trades.
- Include costs. A 1 : 1 trade with fees is worse than 1 : 1.
Enter your numbers in the risk reward and break-even win rate calculator to see expectancy, profit factor and where you sit on the break-even curve.
Try it with your own numbers
Free calculators that do the math for you. No signup, and nothing leaves your browser.
Improve either side of the equation.
Expectancy rises when you win more often or win bigger. These indicators target both.
Keep reading
Last updated October 2026. For education only. Not financial advice.