Risk/Reward Calculator

Compare your potential loss and gain, see the win rate you need to break even, and check the expectancy of a setup.

Calculation Results

For education only. Not financial advice. Trading involves substantial risk of loss.

The risk/reward ratio compares what you stand to lose with what you stand to gain. Enter your entry, stop-loss, target and expected win rate. The calculator shows the ratio, the win rate needed to break even, and your expectancy per trade.

The formulas

  • Risk/reward = |Target − Entry| ÷ |Entry − Stop-loss|
  • Break-even win rate = 1 ÷ (1 + Risk/reward)
  • Expectancy (in R) = (Win rate × Reward) − (Loss rate × 1)

Here R is one unit of risk. A trade that risks $100 has R = $100.

What break-even looks like

Risk/rewardWin rate needed to break even
1 : 150%
1 : 1.540%
1 : 233.3%
1 : 325%

A higher ratio lets you be wrong more often. It does not guarantee profit, because a distant target may be reached less often.

Worked example

Entry $100, stop-loss $98, target $106. Risk is $2 and reward is $6, so the ratio is 1:3. With a 40% win rate:

Expectancy = (0.40 × 3) − (0.60 × 1) = +0.6 R per trade.

At a $100 risk per trade, that averages $60 per trade over many trades. The word “many” matters: a 10-trade sample can look very different.

Common mistakes

  • Using an unrealistic win rate. Base it on tested or journaled results, not hope.
  • Setting targets only to improve the ratio. A target the market rarely reaches lowers your real win rate.
  • Ignoring costs. Spreads and commissions reduce reward and increase risk.
  • Judging one trade. Expectancy describes the average over many trades, not the next one.

FAQ

What is a good risk/reward ratio? There is no single answer. Trend-following strategies often accept lower win rates for higher ratios. Scalping strategies may win often at ratios below 1:1. What matters is that your win rate and ratio together give positive expectancy.

What does the calculator do if my stop and target are on the same side? It shows a warning. That setup is invalid for a single trade.

Where do I get my win rate? From a trade journal or backtest. If you have neither, treat any number you enter as a guess.

Related tools: Position Size Calculator · Profit and Loss Calculator · All trading tools

Educational use only. Not financial advice.