Work it out
The starting values are an illustration, not a suggested trade or allocation.
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Worked example
With the same quantity, B lowers the modeled loss from 52 to 45, but also lowers net target profit from 98 to 75 and net R from 1.8846 to 1.6667.
Choose what stays constant
Both scenarios use the same number of units and the same point value. Each can have its own direction, entry, stop, target, and total round-trip cost. All money values must be in one currency.
Equal quantity is not equal risk. If the stop distances or costs differ, the money that can be lost at the modeled stop also differs. The result shows both amounts so that a ratio does not hide this distinction.
Compare net outcomes on the same basis
For each scenario, gross loss is the adverse entry-to-stop distance × quantity × point value. Gross gain is the favorable entry-to-target distance × quantity × point value.
Costs are added to the loss and subtracted from the gain. Net reward/risk = net target profit / net stop loss. Using gross reward with net loss, or vice versa, would compare inconsistent definitions.
Work through scenarios A and B
Scenario A uses entry 100, stop 95, target 110, 10 units, point value 1, and costs of 2. Its outcomes are −52 and +98, giving 1.8846 R and a break-even target-hit rate of 34.6667%.
Scenario B uses entry 100, stop 96, target 108, the same quantity and point value, and costs of 5. Its outcomes are −45 and +75, giving 1.6667 R and a break-even rate of 37.5%. B has a smaller modeled loss, but also a lower net target multiple.
Interpret the differences without inventing probabilities
The B-minus-A line states the change in modeled stop loss, target profit, and net R. A negative stop-loss difference means B risks fewer currency units at its entered stop; it does not mean B is more likely to work.
A more distant target or a closer stop can change the probability of each outcome. Neither probability is supplied here. Expected value therefore cannot be ranked from these payoff sizes alone.
Use cost sensitivity deliberately
Change one cost assumption at a time to see how sensitive each plan is. If small costs erase most of the target profit, the result depends heavily on an accurate estimate.
The cost field is a total for the whole round trip. It does not change automatically with the exit price. Tiered commissions, variable spreads, borrow fees, and financing may require separate estimates for the two alternatives.
Know when this comparison is too narrow
A trade with partial exits, a trailing stop, a time exit, or a nonlinear payoff has more than two possible outcomes. Summarizing it as one stop and one target leaves information out.
Record the reason for each alternative and compare it with observed outcomes later. The calculator provides a consistent arithmetic comparison, not independent evidence for either trade.
What this tool does not calculate
- No probabilities, price forecast, or recommendation between scenarios.
- Equal units do not imply equal money risk or buying-power requirements.
- Exact stop/target execution and fixed costs are simplifying assumptions.
Common questions
Does the scenario with higher R have higher expected value?
Not necessarily. Expected value also depends on outcome probabilities and other possible exits. This tool supplies payoff arithmetic only.
Are the scenarios compared at equal risk?
No. They use equal quantity and point value. Different stop distances and costs can create different money risk, which is shown explicitly.
Can one scenario be long and the other short?
Yes. Each has its own direction. For a long, stop is below entry and target above it; for a short, those sides are reversed.
What happens if costs exceed the target gain?
The net target outcome becomes negative. The calculator reports that no target-hit rate can break even under that two-outcome model.
Sources & method
An original calculation tool built with AI assistance. Its method and limits are documented here, and calculation examples are checked with automated tests.
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