The ratio from your entry, stop and target — and the win rate that ratio would have to beat before any of it is worth doing.

The number that makes a ratio mean something

A ratio on its own is not information. 1:3 sounds like a good trade and 1:1 sounds like a poor one, but neither statement can be true without knowing how often each one wins. The link between them is one line:

break-even win rate = 1 ÷ (1 + reward/risk)

At 1:1 you need to be right 50% of the time. At 1:3, a quarter. At 1:9, a tenth. What the ratio actually buys you is permission to be wrong more often — nothing else.

Why bigger is not automatically better

The catch is that the two numbers are not independent. Moving your target further away lowers the win rate you need, and it also lowers the win rate you get, because price reaches a distant level less often than a near one. Push the target far enough and the win rate falls faster than the requirement does.

This is why a strategy with a 1:1 ratio and a 60% win rate beats one with 1:5 and a 15% win rate, even though the second sounds far more impressive. Expectancy is the comparison that settles it: win rate × ratio − loss rate, measured in R, where 1R is whatever you risked.

What costs do to the ratio

Spread and commission are paid whichever way the trade goes, so they lengthen the loss and shorten the win — both ends of the ratio, in the same direction. Put your real numbers in the costs fields above and the break-even figure moves; that second number is the one your account lives by.

The tighter the stop, the more it matters, because the cost is a fixed distance against a smaller one. A 1.5 pip spread on a 100 pip stop is noise. The same spread on a 10 pip stop with a 20 pip target turns a 1:2 into 1:1.61, and the win rate you need goes from 33.3% to 38.3% — five points, for a cost most people never put in the sum. Type those numbers in above and you will get exactly that.

What the calculator leaves out

And it assumes the trade ends at one of the two levels. Real trades get closed early, moved to break-even, or stopped by something that was not in the plan. A ratio measured at entry is a description of the plan, not of what happened.

The stop distance this page starts from is the one the position size calculator turns into a lot size, and the pip value page turns into money.

A calculator, not advice. It makes no claim about what any trade or strategy will do.