Risk Reward Calculator for Forex & XAUUSD

The calculator uses directional validation before any distance math. For a long trade it requires stop < entry < target; for a short trade it requires target < entry < stop. This prevents invalid layouts from being silently accepted through absolute-value shortcuts.

Results are written using the Forex Wizard standard: Risk : Reward = 1 : R. A trade where the reward is twice the risk is displayed as 1 : 2.00 (never 2 : 1 labelled as risk:reward).

A planned 1:2 risk-to-reward structure means the target is twice as far from the entry as the stop when measured using the same price unit. For example, a 10-pip risk and a 20-pip reward is a 1:2 plan.

The theoretical break-even win rate before trading costs is 33.33%. Above that, the plan has positive gross expectancy; below it, negative. This does not mean a 1:2 plan is universally best — a distant target may be less likely to be reached, and R:R says nothing about probability.

The R:R formula is the same for gold as for forex — it depends only on relative price distance. What differs for XAUUSD is the lack of a universal pip standard. Different brokers and platforms may use pip, point and tick terminology differently for gold.

This calculator offers three gold display conventions: a $0.01 price increment, a $0.10 price increment, and a custom increment. The R:R ratio is unchanged by the convention because R:R depends on relative price distance, not on what you call a pip.

For the monetary value of a gold price move, use the XAUUSD Pip Value Calculator. For position sizing from account equity and stop distance, use the XAUUSD Lot Size Calculator.

The Multiple Targets mode lets you plan up to four partial take-profit levels. Each target has a price and an allocation percentage, and the allocations must total 100%. The calculator returns the R value of each target and the weighted planned reward.

Break-even win rate is not shown for multi-target plans because partial exits create several possible trade paths (stop before TP1, TP1 then stop, TP1 + TP2 then stop, all targets hit). The simple binary formula is not sufficient. Weighted R describes the planned payoff if each allocation exits at its specified target — it is not a probability model.

This mode does not model moving the stop to break-even, trailing stops, dynamic stop changes, scale-ins, partial stop-outs, re-entry, or the probability of each TP being reached. The model is intentionally transparent.

Risk reward, lot size and pip value answer three different questions. Risk reward measures the payoff geometry of a trade plan. Lot size measures how much volume to trade so that a given stop distance risks a specific amount of account capital. Pip value measures how much one pip of price movement is worth in account-currency terms for a given volume.

This calculator deliberately does not duplicate position sizing — that belongs in the Lot Size Calculator. Once you have planned your R:R here and know your risk amount, use the Lot Size Calculator to convert that risk amount into a lot size for your stop distance. For the monetary value of price moves, use the Pip Value Calculator.

For choosing meaningful entry, stop and target levels in the first place, see the XAUUSD Support and Resistance guide. For the broader risk-management framework, read our forex risk management for beginners guide. And to time your entries around the most liquid sessions, use the Forex Market Hours Clock.

Trading costs shrink net reward and widen net loss. The calculator's cost-adjusted mode (available in Analyze Trade) lets you enter an estimated round-trip cost in price-distance units. This may represent spread, a commission equivalent, a slippage allowance, or a combination — the calculator does not fetch broker fees or assume any default.

The calculator assumes the entered round-trip cost is incurred for either a stop or target outcome, and always shows both gross and cost-adjusted figures so the gross result is never hidden. Cost adjustment applies to single-target trades only — multi-target plans are not cost-adjusted.

Expectancy combines your reward multiple with your historical win rate to estimate the average outcome per trade in R units. The formula is EV = p × R − (1 − p), where p is your win rate as a decimal.

A high R with a low win rate can still lose money. Expectancy is the number that actually determines long-run average outcome — but it depends entirely on the win rate you enter, which the calculator does not estimate. Enter your realistic historical win rate, not a hoped-for one.