⚖️ Risk/Reward Ratio Calculator

Evaluate any trade before entering it. Calculate risk amount, reward amount, risk/reward ratio, break-even win rate, and expected value — essential tools for disciplined traders.

Entry Price ($)

Stop Loss Price ($)

Target Price ($)

Your Win Rate (%, optional)

Risk/Reward Formulas

Risk = |Entry − Stop Loss| Reward = |Target − Entry|

R:R Ratio = Reward ÷ Risk Break-even Win Rate = Risk ÷ (Risk + Reward)

Expected Value = (Win Rate × Reward) − ((1 − Win Rate) × Risk)

How to Use This Calculator

1

Enter Entry Price

The price at which you plan to enter the trade (buy for long, sell for short).
2

Enter Stop Loss

Your maximum loss exit point. Below entry for longs; above entry for shorts.
3

Enter Target Price

Your profit target exit price. Above entry for longs; below entry for shorts.
4

Enter Win Rate (opt)

Your historical win rate % to calculate expected value per trade and edge.

Real-World Example

Entry: $100. Stop Loss: $95. Target: $115. Win rate: 50%.

Risk = $100 − $95 = $5

Reward = $115 − $100 = $15

R:R Ratio = $15 ÷ $5 = 1:3

Break-even Win Rate = 5 ÷ 20 = 25%

EV = (0.50 × $15) − (0.50 × $5) = +$5 per trade

Frequently Asked Questions

What is a good risk/reward ratio?

Most professional traders require at least a 1:2 ratio (risk $1 to make $2). Many successful traders target 1:3 or better. A 1:1 ratio means you need a 50%+ win rate just to break even.

What is the break-even win rate?

The minimum win rate needed to be profitable at a given R:R ratio. Formula: Risk ÷ (Risk + Reward). At 1:2 R:R, you only need to win 33% of trades to break even. At 1:3, only 25%.

What is expected value (EV)?

EV = (Win Rate × Reward) - (Loss Rate × Risk). Positive EV means the trade is profitable in the long run. Even high-win-rate strategies can have negative EV if the rewards are too small.

Should I take every trade with a positive R:R?

Not necessarily. A trade must have BOTH a favorable R:R ratio AND a win rate above the break-even level to have positive expected value. Always consider your actual win rate.

How does position sizing relate to R:R?

Once you know your risk amount per share, you can size your position to risk only a fixed % of your portfolio (e.g., 1-2% per trade). Multiply your max $ risk by (account size × 1%) to find shares.