Measure the distance from entry to a planned target in price units, pips, points, or ticks and compare it with the stop distance.
STEP-BY-STEP
How to use this tool
- Select long or short.
- Enter the intended entry and target prices.
- Enter the instrument’s correct pip, point, or tick size.
- Enter the stop distance using the same unit.
- Add the dollar amount planned at risk.
- Review distance and ratio, then verify the target is technically realistic.
WORKED EXAMPLE
See the calculation in context
A long EUR/USD entry at 1.1000 and target at 1.1100 has a raw distance of 0.0100, or 100 pips at a 0.0001 pip size. With a 50-pip stop, the planned ratio is 1:2.
Calculation method
For a long trade, target distance = target − entry. For a short trade, target distance = entry − target. Selected units = price distance ÷ pip, point, or tick size.
AVOID THESE ERRORS
Common mistakes
- Choosing a target only to force a preferred ratio
- Mixing points, pips and ticks
- Ignoring likely spread, commission or slippage
- Assuming price will fill exactly at the target
- Using an unrealistic target beyond meaningful structure
FREQUENTLY ASKED
Questions and answers
Should a target be chosen before the stop?
Both should come from a defined setup: the stop from invalidation and the target from a realistic objective.
Does a larger target mean a better trade?
No. A distant target may have a lower chance of being reached.
Can I model partial targets?
Yes. Use the separate Multi-Target Position Splitter to distribute quantity across as many as three planned exits.