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TRADE MATH, TAUGHT PLAINLY

Learn the math that keeps losing trades small.

Short lessons on risk/reward, position sizing and expectancy, each with a worked example and a calculator to check your numbers. No signals, no promises.

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LESSON 1 · BREAK-EVEN
win% = 1 / (1 + R)

The higher your reward per unit of risk, the less often you need to be right. Fees raise every row.

R = 150.0%
R = 233.3%
R = 325.0%
Net R:R
Max loss
Break-even win rate
Gross R:R
Position size
Net gain
Fees · EV per trade . Hypothetical example; uses the riskreward.io calculator math.
01 · 6 MINRisk/reward ratio

What R:R is, and isn't.

02 · 8 MINPosition sizing

From 1% risk to share count.

03 · 7 MINFees and slippage

Gross vs net R.

04 · 9 MINExpectancy and journaling

Measuring whether a plan works.

Educational only, not financial advice. Trading involves risk of loss. Full disclaimer

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Frequently asked questions

What does the risk/reward ratio measure?

It compares the potential loss to the potential gain on a hypothetical trade. Whether a ratio is workable depends on win rate: the break-even win rate is 1 / (1 + R), before fees.

How do fees change the math?

Commissions, spreads and slippage add to every loss and subtract from every win, so the net R:R is always lower than the gross R:R, and the break-even win rate goes up.

What is expected value per trade?

EV = (win rate × net gain) − (loss rate × net loss). It is a statistical average over many hypothetical trades, not a forecast for any single trade.

How is risk/reward calculated?

For a long trade: risk = entry − stop, reward = target − entry, and the ratio is reward ÷ risk. For a short trade the subtractions are reversed.

How is position size calculated?

Position size = (account × risk %) ÷ (distance from entry to stop). For example, 1% of a $10,000 account with a $5 stop distance is 20 units, before fees. This calculator also subtracts commissions and per-side fees.