Is a 1:2 risk/reward ratio always better than 1:1?

Not on its own. A higher ratio lowers the win rate you need, but targets placed further away are hit less often. Ratio and strike rate have to be judged together.

What is the break-even win rate?

It is the percentage of trades that must win for the strategy to net zero before costs, calculated as 1 ÷ (1 + reward-to-risk). At 1:2 that is about 33%.

Are trading costs included?

No. Spread, commission, swap and slippage all reduce realised reward, so treat the break-even win rate shown here as a floor rather than a target.

FX Vector Lab · Calculator

Risk / reward calculator

Judge a setup before you take it. Enter entry, stop and target to see risk and reward in pips and cash, plus the win rate the trade needs to break even.

Risk / reward ratio

1 : 2.50

Risk: 50.0 pips
Reward: 125.0 pips
Amount at risk: $500.00
Potential reward: $1,250.00
Break-even win rate: 28.6 %

Break-even win rate is the strike rate this ratio needs to stop losing money before costs. Spreads, commissions, swaps and slippage all push the real figure higher.

How this calculator works

Distances are measured in pips from entry to stop and entry to target, then converted to money using your trade size and pip value. The ratio is simply reward divided by risk.

Break-even win rate = 1 ÷ (1 + reward ÷ risk). A 1:1 setup needs 50% winners, 1:2 needs about 33% and 1:3 needs 25% — before costs.

The useful discipline is to place the stop where the idea is proven wrong and the target where price realistically trades to, then accept the ratio that results. Stretching a target purely to improve the ratio on paper tends to lower the strike rate by more than the ratio gains.

Frequently asked questions

Is a 1:2 risk/reward ratio always better than 1:1?: Not on its own. A higher ratio lowers the win rate you need, but targets placed further away are hit less often. Ratio and strike rate have to be judged together.
What is the break-even win rate?: It is the percentage of trades that must win for the strategy to net zero before costs, calculated as 1 ÷ (1 + reward-to-risk). At 1:2 that is about 33%.
Are trading costs included?: No. Spread, commission, swap and slippage all reduce realised reward, so treat the break-even win rate shown here as a floor rather than a target.