Risk Reward Win Rate Calculator

by

Trading Risk Reward & Win Rate Calculator

The amount you lose on a stop-loss.
The amount you gain at your target.
What percentage of your trades end in profit?

Analysis Results

Risk:Reward Ratio:
Breakeven Win Rate:
Expectancy per Trade:
function calculateTradingMetrics() { var risk = parseFloat(document.getElementById('riskAmount').value); var reward = parseFloat(document.getElementById('rewardAmount').value); var winRate = parseFloat(document.getElementById('userWinRate').value); var resultsDiv = document.getElementById('rr-results'); if (isNaN(risk) || isNaN(reward) || isNaN(winRate) || risk breakeven) { statusBox.innerText = 'STRATEGY IS PROFITABLE'; statusBox.style.backgroundColor = '#d4edda'; statusBox.style.color = '#155724'; document.getElementById('tradeExpectancy').style.color = '#27ae60'; } else if (winRate < breakeven) { statusBox.innerText = 'STRATEGY IS LOSING MONEY'; statusBox.style.backgroundColor = '#f8d7da'; statusBox.style.color = '#721c24'; document.getElementById('tradeExpectancy').style.color = '#c0392b'; } else { statusBox.innerText = 'STRATEGY IS AT BREAKEVEN'; statusBox.style.backgroundColor = '#fff3cd'; statusBox.style.color = '#856404'; document.getElementById('tradeExpectancy').style.color = '#f39c12'; } resultsDiv.style.display = 'block'; }

Understanding Risk Reward and Win Rate

Successful trading is not about being right every time; it is about the mathematical relationship between how often you win (Win Rate) and how much you win relative to your losses (Risk Reward Ratio). This calculator helps you determine if your trading strategy has a positive "expectancy."

The Breakeven Formula

The mathematical formula to find your breakeven win rate is:

Breakeven Win Rate = 1 / (1 + Reward:Risk Ratio)

For example, if you have a 1:2 Risk-to-Reward ratio (risking $1 to make $2), your ratio is 2. The formula becomes 1 / (1 + 2) = 0.333, or 33.33%. This means you only need to be right 34% of the time to be profitable.

Key Profitability Metrics

  • Risk:Reward Ratio (RRR): Measures the potential profit of a trade relative to its potential loss. A 1:3 ratio means for every dollar you risk, you stand to gain three dollars.
  • Win Rate: The percentage of total trades that result in a profit.
  • Expectancy: The average amount you can expect to win or lose per trade over the long term. A positive expectancy is the hallmark of a professional trading system.

Strategic Examples

Risk:Reward Win Rate Required Strategy Type
1 : 1 > 50% Scalping / Day Trading
1 : 2 > 33.3% Swing Trading
1 : 3 > 25% Trend Following

Why Expectancy Matters

Many novice traders focus solely on win rate, seeking "Holy Grail" strategies with 90% accuracy. However, if a trader has a 90% win rate but their average loss is 10 times larger than their average win, they will still lose money. Using this calculator allows you to balance these two variables to ensure long-term capital growth.

Leave a Comment