Risk-to-Reward Ratio (R:R) is a trading metric that compares the potential loss (risk) of a trade to its potential profit (reward). It helps traders decide if a trade setup is worth taking—for example, a 1:2 ratio means you risk $1 to potentially make $2.
Risk/Reward Ratio Calculator
Results
Risk: –
Reward: –
Risk/Reward Ratio: –
Breakeven Win Rate: –
How to Use the Risk-to-Reward Ratio Calculator (Step-by-Step)
What does this calculator do?
It compares how much you could lose (risk) to how much you aim to make (reward) on a single trade—so you can instantly see whether a setup is worth taking.
- Inputs: Entry Price, Stop-Loss Price, Take-Profit Price
- Outputs: Risk per unit, Reward per unit, Risk-to-Reward Ratio (R:R), and your breakeven win rate (the minimum win% needed to not lose money)
Step-by-Step Instructions
- Choose your trade direction
- Long (buy): You expect price to go up.
- Stop-loss is below entry.
- Take-profit is above entry.
- Stop-loss is below entry.
- Short (sell): You expect price to go down.
- Stop-loss is above entry.
- Take-profit is below entry.
- Stop-loss is above entry.
- Long (buy): You expect price to go up.
- Enter your Entry Price
This is the price where you plan to get filled. - Enter your Stop-Loss Price
- Long trades: put a price below entry where the idea is invalidated.
- Short trades: put a price above entry where the idea is invalidated.
- Long trades: put a price below entry where the idea is invalidated.
- Enter your Take-Profit Price
- Long trades: a price above entry where you’ll lock in gains.
- Short trades: a price below entry where you’ll lock in gains.
- Long trades: a price above entry where you’ll lock in gains.
- Click Calculate
The tool shows:
- Risk per unit: distance from entry to stop.
- Reward per unit: distance from entry to target.
- Risk-to-Reward Ratio (R:R): risk ÷ reward (e.g., 0.50 = 1:2).
- Breakeven is the point where your total gains equal your total losses, meaning you neither make a profit nor a loss.
- 👉 In trading, the breakeven win rate shows the minimum percentage of winning trades needed to avoid losing money.
- Risk per unit: distance from entry to stop.
- Interpret the result
- R:R < 1 (e.g., 1:2, 1:3) → potential reward is bigger than risk.
- R:R = 1 (1:1) → reward equals risk.
- R:R > 1 (e.g., 2:1) → you’re risking more than you stand to make.
- R:R < 1 (e.g., 1:2, 1:3) → potential reward is bigger than risk.
- Decide
Many traders prefer setups where reward ≥ 2× risk (1:2 or better). Combine the ratio with your strategy’s historical win rate to judge quality.
Examples (Long & Short)
Long example
- Entry = 100
- Stop-Loss = 95 Your Risk = 100 − 95 = 5
- Take-Profit = 110 Your Reward = 110 − 100 = 10
- R:R = 5 ÷ 10 = 0.50 1:2
- Breakeven win rate = Risk ÷ (Risk + Reward) = 5 ÷ 15 = 33.33%
Short example
- Entry = 200
- Stop-Loss = 210 → Risk = 210 − 200 = 10
- Take-Profit = 180 → Reward = 200 − 180 = 20
- R:R = 10 ÷ 20 = 0.50 → 1:2
- Breakeven win rate = 10 ÷ 30 = 33.33%
Formulas (so users can trust the math)
Long trades
- Risk per unit = Entry − StopLoss
- Reward per unit = TakeProfit − Entry
- Risk-to-Reward = Risk ÷ Reward
- Breakeven win rate = Risk ÷ (Risk + Reward)
Short trades
- Risk per unit = StopLoss − Entry
- Reward per unit = Entry − TakeProfit
- Risk-to-Reward = Risk ÷ Reward
- Breakeven win rate = Risk ÷ (Risk + Reward)
Tip: Think in R-multiples. If your risk (R) is $50 and you bank $150, that’s +3R. The calculator helps you plan R before you enter.
Pro Tips for Accurate Inputs
- Match the instrument’s pricing:
- Stocks/crypto use price units;
- Forex often uses pips—convert pips to price if needed.
- Stocks/crypto use price units;
- Be realistic with stop-losses: Place stops where the trade thesis is invalidated, not where it “feels safe.”
- Account for fees/slippage (if critical): If your market has high costs, consider them when judging your true R:R.
- Keep it consistent: Always use the same units (price per share/coin/contract).
Common Mistakes to Avoid
- Backwards fields: For longs, stop below entry and target above; for shorts, stop above and target below.
- Tiny rewards: A stop that’s too far or a target that’s too close inflates R and kills the setup.
- Ignoring win rate: A great R:R won’t help if your strategy never hits targets.
- Moving stops to “make the ratio work”: Don’t contort risk just to see 1:3. Define logic first, then measure.
How to Use the Ratio in Your Trading Plan
- Filter trades: Only take setups ≥ 1:2 (or your chosen threshold).
- Position sizing: After you like the R:R, size your position so $ Risk = (Entry − Stop) × Quantity matches your account’s risk per trade (e.g., 1%). For position sizing use our tool to calculate optimal trade size.
- Multiple targets? Evaluate each target’s R:R separately (e.g., TP1 at 1:1, TP2 at 1:3).
- Journal your R and results: Track planned R:R vs. actual outcome to see which patterns deliver.
Quick FAQ
Q1: What’s a “good” risk-to-reward ratio?
A: Many traders aim for 1:2 or better. Your optimal ratio depends on your win rate and strategy.
Q2: Does a better ratio guarantee profit?
A: No. You still need an edge. R:R helps ensure your payoff makes sense given your win rate.
Q3: Can I use this for any market?
A: Yes—stocks, crypto, forex, indices, commodities. Just put the prices in the relevant fields you will be get the results.
Q4: How is the breakeven win rate calculated?
A: Risk ÷ (Risk + Reward). At 1:2, you need ~33.33% wins to break even before costs.