Test your trading strategy with our advanced risk-reward calculator. Simulate thousands of trades, visualize your P&L curve, and optimize your win rate for consistent profitability.
Watch 1000+ trades unfold in real-time
See your equity curve develop over time
Find optimal risk-reward ratios
Calculate position sizes and drawdowns
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Simulate 1000 trades with 45% win rate and 1:2 ratio
Expected: +$35,000 total
The risk-reward ratio compares the potential profit of a trade to its potential loss. It's calculated by dividing the distance from your entry point to your take profit by the distance from your entry point to your stop loss.
Comprehensive analysis showing how different risk-reward ratios perform with various win rates over 1000 trades.
| Risk:Reward | 30% Win Rate | 40% Win Rate | 50% Win Rate | 60% Win Rate | Break-even Win Rate |
|---|---|---|---|---|---|
| 1:1 | -40% | -20% | 0% | +20% | 50% |
| 1:1.5 | -25% | -10% | +25% | +50% | 40% |
| 1:2 | -10% | +20% | +50% | +80% | 33.3% |
| 1:3 | +20% | +60% | +100% | +140% | 25% |
| 1:4 | +50% | +100% | +150% | +200% | 20% |
*Results based on 1000 trades with $100 risk per trade. Green values indicate profitable strategies. The break-even win rate shows the minimum win percentage needed for profitability.
Professional traders typically use a minimum 1:2 risk-reward ratio. This allows profitability with win rates as low as 34%, providing a buffer for inevitable losing streaks.
Maintaining consistent risk-reward ratios across all trades is more important than hitting home runs. Small, consistent gains compound over time.
Adjust your risk-reward expectations based on market volatility and timeframe. Trending markets may offer better ratios than choppy, sideways markets.
Beginners should aim for a minimum 1:2 risk-reward ratio. This means risking $1 to potentially make $2. With this ratio, you only need a 34% win rate to be profitable, which is much more achievable than trying to be right 60-70% of the time with 1:1 ratios.
Position size = (Account Risk %) ÷ (Trade Risk %). For example, if you risk 2% of your account per trade and your stop loss is 100 pips away with each pip worth $1, you'd risk $100. With a $10,000 account, your position size would be: (2% × $10,000) ÷ $100 = $2,000 position size.
Yes! Our calculator works for any trading style - day trading, swing trading, scalping, or position trading. The principles of risk-reward ratios apply universally. However, shorter timeframes may require tighter ratios due to spread costs and market noise.
Win rate and risk-reward ratio work together to determine profitability. A higher risk-reward ratio allows for lower win rates. For example: 1:1 ratio needs 50% wins, 1:2 needs 34% wins, 1:3 needs 25% wins. Our calculator shows exactly how these combinations perform over 1000 trades.
While higher ratios (1:5, 1:10) seem attractive, they often lead to lower win rates due to market noise and early exits. Most professional traders stick to 1:2 or 1:3 ratios for consistency. Extremely high ratios may work in trending markets but can be unreliable in normal conditions.
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