Risk Reward Calculator
Your risk-reward ratio determines whether your strategy can hit the profit target before breaching the drawdown limit. Pick a firm below to calculate with their specific rules.
Why Risk-Reward Matters More in Prop Firm Trading
In personal trading, a 1:1 risk-reward ratio with a 55% win rate generates small but steady profits over time. In prop firm trading, that same strategy often fails because the drawdown limit creates a finite runway. You do not have unlimited attempts to let the win rate play out.
On FTMO with 10% max drawdown, a 1:1 R:R strategy experiencing a normal losing streak of 8 trades (which happens to every strategy) consumes most of the drawdown buffer. The same strategy at 2:1 R:R only consumes half the buffer during that streak, leaving room to recover.
The profit target compounds this pressure. FTMO Phase 1 requires 10% profit within the same 10% drawdown limit. At 1:1 R:R, you need high accuracy. At 2:1 R:R, moderate accuracy is sufficient.
Frequently Asked Questions
What is a good risk-reward ratio for prop firm trading?
A minimum of 1.5:1 risk-reward ratio is recommended for prop firm trading. At 1.5:1 with a 45% win rate, your expectancy is positive. At 2:1, you only need a 35% win rate. Higher R:R ratios give you more room for error, which is critical when a single bad day can end your evaluation.
How does risk-reward affect prop firm pass rates?
Traders with R:R below 1:1 need win rates above 55% just to break even. Most prop firm failures come from traders with negative or flat expectancy who cannot hit the profit target before exhausting their drawdown. A 2:1 R:R with a 40% win rate generates steady profits without requiring exceptional accuracy.
Should I use the same R:R for evaluation and funded phases?
During evaluation, slightly higher R:R (2:1+) is safer because you need to hit a profit target within a drawdown limit. During funded trading, you can be more flexible because there is no profit target -- you just need to avoid the drawdown floor. But maintaining discipline with consistent R:R is important in both phases.
What is the difference between reward-to-risk and risk-to-reward?
They are inverses. A 2:1 reward-to-risk means your target is 2x your stop loss. A 1:2 risk-to-reward means the same thing. The prop firm industry typically uses reward-to-risk (R:R), where higher is better. A 3:1 R:R means you make $3 for every $1 you risk.