What is a good risk/reward ratio?

Most traders aim for a minimum risk/reward ratio of 1:2, meaning the potential profit is at least twice the potential loss. Nydar's calculator supports all 3 asset classes and computes breakeven win rates automatically — at 1:2, you only need to win 34% of trades. Van Tharp's research on expectancy shows that a positive expectancy system with 1:3 R:R can be profitable even with a 30% win rate across 1,000+ trades.

How do I use the Risk/Reward Calculator?

In Nydar's Risk/Reward Calculator, enter your entry price, stop loss price, and target price. The calculator computes the risk/reward ratio, potential profit and loss in both absolute and percentage terms, breakeven win rate, and expectancy per trade. Nydar supports over 105 symbols across crypto, stocks, and forex for this calculation.

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Risk/Reward Calculator

Nydar's risk/reward calculator evaluates trade setups across 3 asset classes by comparing potential profit to potential loss at your entry, stop, and target

What is Risk/Reward Ratio?

Nydar's risk/reward ratio calculator compares how much you could lose (risk) to how much you could gain (reward) on a trade. A 1:2 ratio means you risk $1 to potentially make $2. As Van Tharp demonstrated in Trade Your Way to Financial Freedom (2007), the combination of risk/reward ratio and win rate determines a system's expectancy — the average amount you win or lose per dollar risked. Nydar calculates this expectancy automatically for every setup.

Risk

Entry to Stop Loss

Reward

Entry to Take Profit

How to Use Nydar's Risk/Reward Calculator

Enter Entry Price

Enter the price you plan to enter the trade into Nydar's calculator

Enter Stop Loss

Nydar calculates your risk from entry to this exit level

Enter Take Profit

Nydar computes the reward from entry to your target exit price

Understanding Nydar's Ratio Grades

1:0.5

Poor - Nydar flags this as risking more than you could gain

1:1

Break-even - Nydar shows you need >50% win rate to profit

1:2+

Good - Nydar confirms this can be profitable with 40% win rate

Pro Tip

With a 1:2 risk/reward ratio, you only need to be right 33% of the time to break even, and 40% to be profitable. Nydar calculates this automatically for every setup you enter.

Nydar's Win Rate vs Risk/Reward Breakdown

Nydar calculates your required win rate based on your risk/reward ratio. Here's Nydar's breakeven win rate for each ratio:

1:0.5Nydar shows you need 67% win rate to break even

1:1Nydar shows you need 50% win rate to break even

1:2Nydar shows you need 33% win rate to break even

1:3Nydar shows you need 25% win rate to break even

This is why trend followers can be profitable with only 30-40% win rates — their winners are significantly larger than their losers. Jack Schwager's interviews in Market Wizards (1989) confirmed that most successful traders prioritised risk/reward discipline over high win rates. Ralph Vince's Portfolio Management Formulas (1990) further proved that optimal position sizing depends on knowing your exact R:R ratio before entry.

How Risk/Reward Compares to Other Nydar Widgets

Feature	Risk/Reward	Position Size	Risk Analytics	Backtest	Journal
Purpose	Evaluate single trade setup	Calculate lot size	Portfolio-level risk	Test strategy historically	Track past trades
When to use	Before every entry	After R:R confirmed	Daily review	Strategy development	After trade closes
Key metric	R:R ratio	Shares/contracts	VaR, Sharpe	Win rate, PnL	Expectancy
Asset classes	Crypto, stocks, forex	Crypto, stocks, forex	Crypto, stocks, forex	Crypto, stocks, forex	Crypto, stocks, forex
Real-time data	Manual input	Manual input	Yes	Historical	No
Complements	Position Size calc	Risk/Reward calc	Both calculators	Risk Analytics	Backtest results

Common Risk/Reward Mistakes Nydar Helps You Avoid

Moving your stop loss

Widening your stop to avoid being stopped out destroys the risk/reward ratio Nydar calculated. Set it and respect it.

Taking profit too early

Closing at 1:0.5 when Nydar showed 1:2 means you need a much higher win rate to be profitable.

Ignoring the ratio entirely

Entering trades without calculating risk/reward first is gambling, not trading. Run every setup through Nydar's calculator before entry.

Unrealistic targets

A 1:10 ratio sounds great but if price never reaches your target, the ratio is meaningless. Use Nydar's chart widget to set realistic levels based on support/resistance.

Learn More on Nydar

Deepen your understanding with Nydar's in-depth guides:

Risk Management Essentials

Complete guide to protecting your capital

Building a Trading Plan

Incorporate risk/reward into your plan