Risk to reward calculator

Do my stop, target and win rate add up to an edge at all?

Result

Expectancy per trade

+0.35 R

Reward to risk: 2.00 R
Win rate to break even: 33.3%
Over 100 such trades: +35 R

One R is your risk per trade. The calculator grades the three numbers you typed; it cannot tell whether the win rate itself is real.

Not investment advice

How it's worked out

Expectancy = win rate × reward to risk, minus (1 minus the win rate) × 1R

With your numbers: 45% × 2.00R, minus 55% × 1R = +0.35 R

How it works

Reward to risk is the distance to the target divided by the distance to the stop. The win rate needed to break even is 1 ÷ (1 + that ratio): at 1.5R you break even winning 40% of the time. A win rate above it is an edge; below it, the setup loses money however it feels.

Questions

Is a higher reward to risk always better?

Not on its own. Wider targets are hit less often, so the ratio and the win rate move against each other. What matters is the pair of them against the breakeven, which is what the calculator prices.

Does the spread change my real ratio?

Yes. The spread and the commission are paid on every trade, which shortens the target and lengthens the stop in effect. On tight setups the difference between firms on the live board is a real share of one R.

What expectancy do I need to pass a challenge?

A positive one, held over enough trades to reach the target before a limit is hit. The pass probability calculator turns that sentence into a simulated number.