Compare potential loss at your stop loss against potential gain at your take profit, and see the win rate needed to break even.
The risk–reward ratio compares what you stand to lose if your stop loss is hit against what you stand to gain if your take profit is hit. Risk is the price distance from entry to stop; reward is the distance from entry to take profit. The ratio is expressed as 1 : R, where R is reward divided by risk.
Risk per unit = |Entry − Stop loss|
Reward per unit = |Take profit − Entry|
Ratio = 1 : (Reward / Risk)
Breakeven win rate % = 1 / (1 + Reward/Risk) × 100A 1:2 trade only needs a win rate above 33.3% to be profitable; in general the breakeven win rate is 1 / (1 + R). Enter a quantity to also see the risk and reward in currency terms.