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Create AccountTake Profit Calculator
Find the target price that gives the reward to risk ratio you are aiming for.
Your Result
The calculation runs in your browser. Rates used for currency conversion are indicative — check your broker for the exact figure.
The direction of the trade is worked out from the entry and the stop, so there is nothing to choose: a stop below the entry is a buy and the target goes above, and the other way round for a sell. Putting a target on the wrong side of the entry is a mistake that survives right up until the order is rejected.
The last line is the one worth reading. A reward to risk ratio implies a break-even win rate, and it is fixed arithmetic: at two to one you need to be right just over a third of the time, at one to one you need more than half. Traders who chase high win rates with small targets rarely work out what that requires.
When to use it
- Before entering, to see whether the target the chart offers is worth the stop it needs.
- When a strategy specifies a ratio rather than a level.
- To compare two setups on the same pair with different stops.
- To check what win rate a ratio actually demands before committing to it.
The risk is the distance from entry to stop; the reward is that distance multiplied by the ratio.
Risk = |Entry − Stop|
Reward = Risk × Ratio
Target = Entry + Reward (buy) or Entry − Reward (sell)
Break-even Win Rate = 1 ÷ (1 + Ratio)- The break-even win rate ignores costs. Spread, commission and swap all push the real figure higher, and on a scalping strategy they can push it a long way higher.
- A ratio is not a prediction. It says what the trade pays if it works, not how often it will.
- Partial exits change the arithmetic completely. If half the position comes off at one to one, the effective ratio on the whole trade is lower than the number on the second target.
- Targets beyond about four to one are hit far less often than the ratio suggests, because price has to travel further without turning.
Buying EUR/USD at 1.0850 with a stop at 1.0800, aiming for two to one on 1.00 lot.
Working: the stop is fifty pips below the entry, so the target is a hundred pips above it at 1.0950. At two to one this setup only has to work one time in three to break even, before costs.
How does it know whether I am buying or selling?
From the stop. A stop below the entry can only belong to a buy, and one above it to a sell. If the target appears on the side you did not expect, the entry and stop are the wrong way round.
What is a good reward to risk ratio?
The honest answer is whichever one your strategy actually achieves, which only a journal can tell you. What is fixed is the arithmetic underneath: the break-even win rate shown here is what the ratio demands, and if your record is below it the ratio is too low for how you trade.
Should I always aim for a bigger ratio?
Not automatically. A larger target is hit less often, and the two effects can cancel out. The pairing that matters is your ratio and your win rate together, which is what the expectancy calculator measures.
Does this account for the spread?
No. On a buy the target is reached by the bid, so the effective distance is a little longer than shown. It matters most on wide-spread instruments and short targets.
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