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Stop Loss and Take Profit in Forex Meaning
Stop loss and take profit in forex meaning explained clearly for beginners. Learn how they work and how to use them correctly.
Risk:reward calculator
How much a trade plan stands to make against what it risks, and the share of trades that would need to win just to break even.
Result
Risk to reward
1 : 3.00
At 1:3.00, you need to win 25.0% of trades to break even.
- Risk (pips)
- 30.0
- Reward (pips)
- 90.0
- Break-even win rate
- 25.0%
Before costs. A spread or commission adds to the risk and takes from the reward, so the real break-even win rate is a little higher.
This tool uses no exchange rates. Everything is calculated in your browser; nothing you enter is sent anywhere.
How it is calculated
Risk is the distance from entry to the stop loss, reward the distance from entry to the take profit. Their ratio says how many times the risk a winning trade pays.
reward multiple R = reward pips ÷ risk pipsbreak-even win rate = 1 ÷ (1 + R)
A higher ratio needs fewer winners, but a more distant target is reached less often, so the ratio says nothing on its own about whether a plan is good. Costs move the break-even point up.
Worked example
- Buy EUR/USD at 1.1000, stop at 1.0970, target at 1.1090: 30 pips of risk for 90 of reward.
- 90 ÷ 30 = 3, a ratio of 1:3.
- 1 ÷ (1 + 3) = 25%: one winner in four breaks even before costs.
Risk. These tools do arithmetic on the figures you enter. They are not advice, and unless a field asks for them they leave out spreads, commission, financing and slippage. Past results do not predict future ones. Trading leveraged currency products carries a high risk of loss. Read our financial disclaimer.