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Risk-Reward Ratio and Break-Even Win Rate | Borearis
Risk-reward compares what you can lose with what you can gain, measured from entry, stop and target.
Formula
R:R = |target − entry| ÷ |entry − stop|. A 10-dollar stop and a 25-dollar target is 2.5R.
Break-even win rate
1 ÷ (1 + R:R). At 2.5R you need about 28.6% of trades to win to break even, before costs.
How to use it
Set the stop from structure or ATR, then check whether the target is realistic. A high ratio with a target in the wrong place is still a bad trade.
Use the risk-reward calculator, then the position size calculator.
Is a higher R:R always better?
No. A high ratio with a low-probability target can be worse than a modest one with a realistic target.
Does the break-even rate include costs?
No. Spread and commission raise the required win rate.
Educational content only, not investment advice.