Reward Risk Ratio Formula RRR = (Take Profit – Entry ) / (Entry – Stop loss) and vice versa for a sell trade . For example you set the stop loss for a trade to 100 pips and the take profit to 200 pips, this is a risk-reward of 1/2. Just remember that whenever you trade with a good risk to reward ratio, your chances of being profitable are much greater even if you have a lower win percentage. Reward:Risk Calculator. Required Minimum Risk to Reward Ratio = (1 ÷ Historical Win Rate of Your Trading Strategy) – 1 For example, if you know that the historical win rate of your trading strategy is 40%, then plugging this into the formula would yield the following outcome: (1 ÷ 0.4) – 1 = 1.5 Let’s take the two trade examples from above – the first setup with a reward to risk ratio of 1, and second setup with a reward to risk ratio of 2. More: Expectancy Calculator.

Now, if you use TradingView, then it makes it’s easy to calculate your risk to reward ratio on every trade. However, there is some Risk Reward Ratio Calculator Tool that can do the job for you. with 70% you can risk much more than with 30% and it's a safer bet than any. To fully understand the power of the Reward:Risk Ratio, read our post here: Reward:Risk Ratio Guide . with 70% winrate you can drop even to 50% and you don't lose anything . In the fields below, enter the parameters for your trade and you will get the reward:risk ratio and other related metrics. Some have higher win-rates, others lower, some have high reward:risk, some have lower.

Such as 50%, 5 out of 10, or 50 out of 100.

For example you set the stop loss for a trade to 100 pips and the take profit to 200 pips, this is a risk-reward of 1/2. If you see a Risk-Reward Ratio of 1/2 it means you are risking 1 to gain 2. An example: Also… The risk reward ratio tool tells you what your position size should be given the size of your account … Besides increasing the success rate and profitability of trades, risk reward ratios are also important for another reason. If you see a Risk-Reward Ratio of 1/2 it means you are risking 1 to gain 2. of course it's a bad thing if you are presented with such an option but the truth of the matter is that high winrate is very very hard to find. Home Reward:Risk Calculator. Based on that 60% win rate; if you have a minimum 1:1 risk:reward ratio as a rule then you are keeping that small advantage knowledge has given you. Risk Reward Ratio Calculator Indicator For MT4 Why is this important? Win-rate is how many trades you win, usually given as a percentage.
BUT… And this is a big one, like Jennifer Lopez’s behind… setting large reward-to-risk ratio comes at a price. Step 2: Minimum Winrate.

Required Win Rate = 1 ÷ (1 + Historical Risk to Reward Ratio of Your Trading Strategy) For example, if you know that your trading strategy has an expected risk to reward ratio of 1:1 from extensive back testing, then plugging this into the formula would yield the following outcome: 1 ÷ (1 + 1) = 0.5, which is 50%.

Here’s what you need to do: Select the risk reward tool on the left toolbar; Identify your entry, stop loss and target profit; And it’ll tell you your potential risk to reward on the trade. The risk/reward ratio is often used in combination with other risk management ratios, such as the win/loss ratio, which compares the number of winning and losing trades, and the break-even percentage, which gives the number of winning trades that are required to break even. A higher win rate means your risk-reward can be higher. choosing a high reward to risk over a high winrate is a bad thing. Reward:Risk Ratio Calculator. A low win rate, 50% or below, requires winners to be larger than losers in order for you to be profitable. Now, imagine A trader has an average winning rate of 50%, i.e. It's a powerful tool to determine the potential risks before entering any positions. Do you need some help interpreting the values? The risk and reward calculator will help you to calculate the position's best targets and their respective reward-to-risk ratios based on the Fibonacci retracements from the local peak and bottom. Remember, to calculate risk/reward, you divide your net profit (the reward) by the price of your maximum risk. Let’s take the two trade examples from above – the first setup with a reward to risk ratio of 1, and second setup with a reward to risk ratio of 2. In normal circumstances you would need to calculate yourself all of these values.