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Risk-reward ratio calculator
The ratio on its own tells you very little. The win rate it implies tells you whether the trade is worth taking.
At 1.00:1 you need to be right 50.0% of the time just to break even before costs. A higher ratio lowers that bar and is reached less often — the two move against each other, which is why win rate on its own tells you nothing about whether a system makes money.
Break-even win rate is calculated before spread, commission and slippage. Include those and the real requirement is higher — on short gold targets, materially so.
Why break-even win rate is the real output
A 3:1 ratio sounds obviously better than 1:1, and in isolation it is meaningless. What matters is that 3:1 needs to be right 25% of the time to break even while 1:1 needs 50%, and reaching a distant target is less likely than reaching a close one. The two effects work against each other.
This is why pushing the ratio higher is not free. Every increase lowers the required win rate and lowers the actual win rate at the same time, and past some point the second falls faster than the first. The optimum is strategy-specific and cannot be assumed — see risk-reward ratio.
Costs move the bar
The break-even figure here is calculated before spread, commission and slippage. On gold those are substantial relative to short targets: a $0.30 spread plus $7 per lot round-turn commission takes over 12% of a $3 target at 0.10 lots. Include them and a system that looks marginally profitable can be reliably negative.
The spread cost calculator converts your own account's costs into the share they take from a specific target, which is the arithmetic that decides whether a short-target strategy is viable at all.
Fixing the ratio rather than tuning it
Our engine fixes the target at 2.0 times the stop distance in every market regime. An earlier version scaled it per regime, which improved in-sample results and turned out to be fitting noise — removing the feature made the system better by making it simpler. That episode is written up in curve fitting.
Common questions
What is a good risk-reward ratio?
There is no universal answer, because a higher ratio mechanically lowers the win rate. Between 1.5:1 and 3:1 covers most systematic approaches. What matters is that the actual win rate clears the break-even rate for whatever ratio you use, after costs.
Can a 1:1 system be profitable?
Yes, provided the win rate is comfortably above 50% after costs. It is a harder bar than it sounds, because spread and commission are paid on every trade and push the real requirement several points higher.
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Educational information only, not financial advice. Trading leveraged products carries substantial risk of loss. Last updated 2026-08-11.