Risk/reward and break-even calculator
Reward-to-risk before and after fees, the exit price that breaks even, and the win rate a trade like this needs.
Example figures
Your figures
Result
Reward to risk after fees
1.93 : 1
- Loss if the stop is hit, after fees
- A$559.00 (a 6.35% move)
- Profit if the target is reached, after fees
- A$1,081.00 (a 12.94% move)
- Fees: stopped out / at the target
- A$19.00 / A$19.00
- Break-even exit price after fees
- A$42.60
- Win rate needed to break even
- 34.1% (32.9% before fees)
| Reward to risk | Break-even win rate |
|---|---|
| 0.50 : 1 | 66.7% |
| 1.00 : 1 | 50.0% |
| 1.50 : 1 | 40.0% |
| 2.00 : 1 | 33.3% |
| 3.00 : 1 | 25.0% |
| 4.00 : 1 | 20.0% |
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How this is calculated
Reward-to-risk is the distance to the target divided by the distance to the stop. After fees it is the net profit at the target divided by the net loss at the stop, both including a fee on the way in and on the way out.
The break-even win rate is risk ÷ (risk + reward). A trade risking $1 to make $2 needs to work more than one time in three; below that rate, repeating it loses money on average. The expected result at a win rate p is p × reward − (1 − p) × risk.
These figures say nothing about how likely the target is. A distant target improves the ratio but is usually reached less often, so a ratio is only meaningful alongside an honest estimate of the win rate.