Risk reward ratio: how to calculate R from stop and target
By Aiobot · Oct 6, 2026
Risk:reward (R) is how far the target sits versus how far the stop sits, in pips, points, or price. If the stop is 20 pips and the target 40, R is 2, often written 1:2. Measure both from the same entry. R does not forecast fill, spread, or slippage, and a higher R does not make a setup valid. Size the lot from the risk amount and stop distance — the lot formula is a different page. Promax draws Entry, stop, and target lines on MT5 so you can read the distances; it does not choose the trade.
Risk-reward from two distances
Target distance divided by stop distance, in the same unit. A ratio is not a profit and not a win rate.
R = target distance ÷ stop distance. The label is written 1:R.
Ratio
Both distances must be above zero.
Geometry of two distances you typed. It does not predict a fill, a win rate, or a profit.
How do you calculate risk reward ratio?
- Mark the entry.
- Mark the stop loss and measure the distance to entry (pips, points, or price — one unit).
- Mark the take profit (or the invalidation of the idea if you use a technical target) and measure that distance to entry in the same unit.
- R = reward distance ÷ risk distance. If risk is 25 pips and reward 50, R = 2 (often spoken as 1:2).
- Size the lot from the dollar risk and the stop, not from R. That formula lives on how to calculate lot size.
Example — teaching numbers, not a live quote: entry 1.1000, stop 1.0980 (20 pips), target 1.1040 (40 pips) → 40 ÷ 20 = 2.
The ratio does not pay you. It only describes geometry if both levels fill as drawn.
What does 1:2 actually mean?
1:2 means the planned target is twice the planned stop, from the same entry. 1:1 is equal distances. 1:3 is three times as far to the target as to the stop.
Writers sometimes flip the order (2:1 meaning the same 1:2 idea). Say the R-multiple out loud: “two R” = reward twice risk.
It is not a required house rule. Some desks accept 1:1 if their playbook says so. This page does not rank ratios.
Does a higher R guarantee profit?
No. A 1:5 sketch with a stop that never gets respected, or a target in empty air, is still a losing geometry. Spread, slippage, and partial fills change the realised R. A win rate is a different statistic; this article does not claim one.
If you move the stop after entry, the R you wrote in the journal is no longer the R you traded.
How does this relate to lot size?
Lot size answers how many contracts so that a full stop ≈ the dollars you accepted. R answers how far the target is versus that stop. Mixing them — “I want 1:3 so I’ll triple the lot” — is how accounts blow through a daily loss line.
Term: lot size.
Can Promax show R on MT5?
The Promax panel draws Entry / SL / TP lines you place. Read the distances from those lines; compute R with the steps above. Promax can size the lot from percent, dollars, or a fixed lot against the stop. It does not pick the setup and it is not a signal.
Aiobot does not guarantee that a 1:2 target will fill.