How the numbers are worked out
R is the reward measured in units of risk: a target’s distance from the entry divided by the stop’s distance from the entry, both in pips. A target 50 pips away on a 25 pip stop is 2R. Both distances use the same pip value and the same lot size, so R is the same at 0.01 lots as at 1.00, which makes it a fair way to compare signals on different markets.
The break-even win rate is 1 ÷ (1 + R): the share of trades that must reach the target, with every other trade a full stop, for the account to finish level. At 1R that is 50%, at 2R 33.3% and at 3R 25%. Spread, commission and swap are left out, so the rate needed in practice sits a little higher.
A worked example
The values loaded here are the gold sell from what TP1, TP2 and TP3 mean: entry 2410.50, stop 2418.50, targets 2405.50, 2400.50 and 2392.50. The stop is above the entry, so the calculator reads a sell, and it is 80 pips away, $8.00 of price. TP1 is 50 pips away, 0.63R, with a break-even win rate of 61.5%. TP2 is 100 pips, 1.25R, at 44.4%. TP3 is 180 pips, 2.25R, at 30.8%.
Reading three targets
Price has to pass TP1 to reach TP2, so a nearer target is reached at least as often as a further one, and it needs the higher win rate. The table turns a signal’s three targets into a comparison you can check: set each break-even rate against how often a provider’s signals reached that target. Our results page records the highest target each closed signal reached, stops included, and the take profit guide compares exit rules on a replayed month.
Pasting a signal
Paste the whole message and the reader fills in the market, entry, stop and targets. It understands labelled lines, one liners, entry zones and targets separated by slashes, and it never invents a stop: a message without one is reported, and a trade without a stop has no R. For an entry zone it measures from the edge furthest from the stop, so the R shown is the lowest the zone allows.
What R leaves out
R describes the plan, not your fill. An entry taken after price has moved towards the targets puts the stop further away in pips and the targets closer, so the same signal entered late has a lower R than the one posted. Check the levels against your own entry before relying on the numbers.
Questions
What does a 1:2 risk reward ratio mean?
The target is twice as far from the entry as the stop: risk 25 pips to make 50. In R terms the trade pays 2R, and it breaks even at a 33.3% win rate before costs.
How do I calculate the R multiple of a trade?
Divide the target’s distance from the entry by the stop’s distance, both in pips. A 75 pip target on a 25 pip stop is 3R. After the trade, the same sum on the actual exit gives the result in R, and a full stop is minus 1R.
Does the break-even win rate include costs?
No. Spread, commission and swap come off every trade, winners and losers alike, so the win rate needed in practice is a little higher than the figure shown, most of all on tight stops.
Does it work for a sell?
Yes. The calculator reads the direction from the stop: above the entry is a sell, below it a buy. A target on the same side as the stop is flagged.
Every closed signal is on the record
The results page lists each closed VIP signal with its entry, stop, targets and outcome, stops included.
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