Calculate your risk-to-reward ratio, potential profit/loss, and breakeven win rate for any crypto trade.
The risk-to-reward ratio (R:R) compares the potential profit of a trade to its potential loss. It is the foundation of any sustainable trading strategy.
How to Calculate R:R
Reward = |Take Profit − Entry| Risk = |Entry − Stop Loss| R:R Ratio = Reward ÷ Risk
Breakeven [Win Rate](/glossary/breakeven-win-rate)
Breakeven Win Rate = 1 ÷ (1 + R:R)
At R:R of 1:2 → breakeven win rate = 33.3% At R:R of 1:3 → breakeven win rate = 25%
This means with a 1:3 R:R, you can lose 75% of your trades and still break even. Most retail traders lose because they take poor R:R trades while trying to achieve 70%+ win rates.
The Professional Approach
Professional traders focus on R:R first, then win rate second. A 40% win rate with 1:2.5 average R:R produces strong returns. A 60% win rate with 1:0.8 average R:R produces losses over time.
Risk/Reward Ratio (R:R)
The ratio between the potential loss on a trade and the potential profit — e.g. 1:2 means risking $1 to make $2.
R-Multiple
A unit of measurement expressing trade outcomes in terms of initial risk — a +2R trade means you made twice your risk amount.
Win Rate
The percentage of trades that end in profit — used alongside R:R to determine whether a strategy has a positive expected value.
Expected Value (EV)
The average outcome of a strategy over many repetitions — positive EV means profitable long-term, negative EV means losing long-term.
A minimum of 1:2 is recommended — risking $1 to make $2. Many professional traders target 1:3 or higher. A 1:2 R:R means you only need to win 34% of your trades to break even.
The breakeven win rate is the minimum win percentage needed to be profitable given your R:R ratio. Formula: Breakeven Win Rate = 1 ÷ (1 + R:R Ratio). At 1:2, you need to win 33.3% of trades to break even.
No. A high R:R ratio improves your edge but must be combined with a win rate that exceeds the breakeven threshold. A 1:5 R:R is useless if you only win 10% of the time.
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