Risk Reward Calculator for Asymmetric Trade Selection
Why this page matters
Risk-reward is not a guarantee of profit; it is a filter for selecting setups with acceptable asymmetry.
Pre-execution checklist
Risk level is invalidation-based.
Target has structural logic.
R:R is calculated after spread and likely slippage.
Expectancy remains positive under conservative assumptions.
Alternative management plan exists if first target is missed.
Calculation logic and practical workflow
Define R = Entry - Stop distance in pips or points based on direction.
Define reward distance to target and compute ratio: R:R = Reward / Risk.
Example: risk 20 pips, target 50 pips => 2.5R.
Set minimum acceptable ratio per setup family.
Connect ratio with win rate using expectancy: E = (WinRate × AvgWin) - ((1-WinRate) × AvgLoss).
Example: 45% win rate and 2R average winner => +0.35R.
Run sensitivity table for spread widening and late fills.
If setup fails R:R gate after costs, skip trade.
Common mistakes to avoid
Using optimistic target without structural justification.
Ignoring spread/slippage so real reward is smaller than planned.
Taking poor entries and trying to fix them with wider targets.