Risk/Reward Ratio Calculator
Calculate the risk/reward ratio of a trade and the win rate it needs to break even.
Please note: Trading carries substantial risk of loss. These calculators are planning tools, not trading advice, and no position sizing method prevents losses.
What the Risk/Reward Ratio Calculator does
Risk/reward compares what you stand to lose against what you stand to gain. It matters because it sets the win rate you need: at 1:3, you can be wrong three times out of four and still break even. A high win rate on a poor ratio is worth less than it looks.
Formula
Risk = |Entry − Stop-loss|Reward = |Take-profit − Entry|Ratio = Reward ÷ RiskBreak-even win rate = 1 ÷ (1 + Ratio) × 100
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Direction | one of 2 options | Yes | — |
| Entry price | selected currency | Yes | Accepts 0 or more. |
| Stop-loss price | selected currency | Yes | Accepts 0 or more. |
| Take-profit price | selected currency | Yes | Accepts 0 or more. |
| Quantity | number | Optional | Optional — shows the amounts in currency. Accepts 0 or more. |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Direction and Currency.
- Enter Entry price, Stop-loss price and Take-profit price.
- Optionally add Quantity.
- Select Calculate.
Worked example
Long at $100 with a stop at $97 and a target at $109.
- Direction
- Long
- Entry
- 100
- Stop
- 97
- Target
- 109
Risk $3, reward $9, ratio 1:3. You only need to win 25% of the time to break even.
Frequently asked questions
What is a good risk/reward ratio?
At least 1:2 for most discretionary strategies. Below 1:1 you need to win more than half the time just to stay level, which is hard to sustain.
Can a low win rate still be profitable?
Yes. Trend-following systems often win under 40% of trades but stay profitable because winners run several times larger than losers.
Method and sources
Method. Risk as the distance from entry to stop, reward as the distance from entry to target, their ratio, and the win rate at which that ratio breaks even.
Assumptions
- Both stop and target fill at the prices set, and the trade resolves at one or the other.
- Risk is measured from entry, not from the current price.
Limitations
- The ratio describes the shape of a trade, not its odds. A 1:3 trade is worth taking only if it wins more often than one time in four, and the calculator has no way of knowing whether it will.
- Moving a target further out improves the ratio and lowers the probability of reaching it, so the ratio can always be flattered without improving the trade.
- Costs are excluded, so the true break-even win rate is above the figure shown.