Risk/reward compares the distance from entry to target with the distance from entry to stop. Position size then converts your chosen account risk into units. A 2:1 ratio is not automatically good; probability, costs, execution and invalidation still matter.
What to remember
- Define account risk before calculating size.
- 1R is your planned loss at the stop.
- A tighter stop increases size and execution sensitivity.
- Fees, spread and slippage reduce the displayed ratio.
Risk/reward and position-size calculator
Use your own numbers. The calculator runs in the browser and does not place an order.
Educational estimate before fees, spread, slippage, funding and currency conversion.
The formula and the meaning of 1R
For a long trade, unit risk equals entry minus stop and unit reward equals target minus entry. For a short trade, risk equals stop minus entry and reward equals entry minus target. Reward divided by risk gives the headline ratio.
If you risk 1% of a $5,000 account, 1R equals $50. A full stop is approximately −1R and a target twice as far as the stop is approximately +2R before costs. Expressing outcomes in R makes instruments and account sizes comparable.
HyperFX recalculates R:R from numeric levels in code; it does not trust a ratio written by the AI model.
Position size connects the chart to the account
Position size in units equals risk amount divided by risk per unit. With $50 risk and a $2 stop distance, the theoretical size is 25 units. Leverage does not reduce the economic loss at the stop; it only changes required margin and liquidation risk.
A very tight stop creates a large theoretical size and makes spread, wick noise and slippage proportionally more important. Cap size, check contract multipliers and convert quote currencies where necessary.
- Account size × risk % = risk amount
- Risk amount ÷ stop distance = theoretical units
- Check tick value, lot size and contract multiplier
- Reduce for correlated open positions
Ratio is useful only with probability and costs
A strategy that wins 40% at +2R and loses 60% at −1R has a theoretical expectancy of +0.2R before costs. Changing the average win, average loss or execution rate changes the result. That is why a single setup's R:R cannot prove a strategy.
Use the calculator as a pre-trade consistency check, then validate real expectancy from a sufficiently large demo or live journal. Avoid increasing risk after a losing streak or because a setup has high confidence.
- Expected R = win rate × average win R − loss rate × average loss R
- Model partial exits and breakeven consistently
- Include fees, spread, funding and slippage
- Set a portfolio-level risk cap