How to use it
- Enter the entry price.
- Enter the stop-loss: below entry for a long, above for a short.
- Enter the take-profit target.
- Optionally add quantity to see money at risk and potential reward.
The formula
R:R = |Target − Entry| ÷ |Entry − Stop| · Break-even win rate = 1 ÷ (1 + R:R)
Entry 100, stop 95, target 112: risk 5, reward 12, so R:R = 2.4. You break even winning just 29.4% of trades like this one.
Reading the ratio
An R:R of 2 means the target pays twice what the stop costs. It says nothing about probability on its own: a 5:1 target that is rarely reached can be worse than a 1.2:1 target that usually is.
The break-even win rate
Combine both sides: with R:R = R, you need to win more than 1 ÷ (1 + R) of the time to make money before fees. At 1:1 that is 50%; at 2:1, 33.3%; at 3:1, 25%.
Make targets realistic
Place targets at levels the market has a reason to reach — the next resistance, a measured move from the pattern, a Fibonacci extension — not at whatever price produces a nice ratio.
Educational content — not financial advice.