Risk / Reward Ratio

For most prop firm traders, a minimum R:R of 1:2 or 1:3 is recommended. This allows you to be wrong more than half the time and still remain profitable. At a 1:3 ratio, you only need a 26% win rate to break even. High-frequency traders may operate at 1:1.5, while trend followers often aim for 1:5 or higher.

Prop firms like FTMO or Topstep have strict daily loss limits. A high R:R ratio helps you stay within these limits by requiring smaller position sizes to hit your profit targets. If you aim for 1:3, you can risk 0.5% per trade and still hit a 10% profit target with just 7 winning trades, even if you take multiple losses along the way.

Expected Value (EV) is the average amount you expect to win or lose per trade based on your historical win rate and average R:R. A positive EV means your strategy is profitable over the long term. The formula is: (Win % × Average Win) - (Loss % × Average Loss). Our calculator shows this as a multiplier of your unit risk.