Reward/Risk Ratio Calculator: Analyze Any Trade Setup Before You Risk Real Money
Enter your entry price, stop loss, and profit target to instantly see your R:R ratio, breakeven win rate, and potential P&L. Reverse-engineer your setup — find the exact entry or target price needed for any desired ratio.
Reward = | Target − Entry |
Risk = | Entry − Stop Loss |
R:R Ratio = Reward ÷ Risk
Breakeven Win Rate = 1 ÷ (1 + Ratio) × 100
At 2:1, you gain $2 per $1 risked and only need a 33.3% win rate to break even.
Next Step: Ready to see the full pre-trade picture? Use our Stop Loss & Take Profit Calculator.
How to Use This Calculator
Select Long or Short
Choose your trade direction. This ensures the calculator validates your prices correctly — targets above entry for longs, below entry for shorts.
Choose Your Calculation Mode
- Find R:R Ratio (default): Enter entry, stop, and target — the calculator tells you the ratio.
- Find Entry Price: Enter your desired ratio, stop, and target — it tells you where you need to enter.
- Find Target Price: Enter your entry, stop, and desired ratio — it tells you where to set your profit target.
Enter Your Prices
Fill in the visible price fields based on your selected mode. All prices should be based on real chart levels — support, resistance, moving averages — not round numbers picked out of thin air.
Add Shares (Optional)
Enter your share count to see dollar P&L values alongside per-share amounts. This is useful when comparing the actual dollar impact of different setups.
Read the Analysis
The calculator shows: R:R ratio with a quality badge (Favorable / Acceptable / Poor), per-share gain and loss, breakeven win rate, gain and loss as a percentage of entry, and a visual risk/reward bar. The educational callout explains what the numbers mean for your specific setup.
Example Scenarios
Example 1: Strong Breakout Setup (2.8:1)
At this ratio, you only need to win about 1 in 4 of these trades to break even. With a typical 50% win rate, this setup is solidly profitable over time.
Entry: $185.00 | Stop: $182.50 | Target: $192.00
Example 2: Chasing a Move (0.4:1)
You'd need to win more than 7 out of 10 of these trades just to break even. The math is heavily against you. This is what happens when you chase a stock that's already extended — the stop is wide and the upside is thin.
Entry: $50.00 | Stop: $45.00 | Target: $52.00
Example 3: Find Your Entry (Reverse Engineering)
You want a 2:1 ratio. Target is $110, stop is $95. Where should you enter?
Now you know: set a limit order at $100 and wait for the pullback. Don't chase above that level.
❓ Frequently Asked Questions (FAQ)
What is a risk-reward ratio in trading?
The risk-reward ratio compares the potential loss (risk) of a trade to the potential profit (reward). For example, a 1:3 risk-reward ratio means risking $100 to potentially make $300. Traders use this ratio to evaluate if a trade is worth taking.
How do you calculate risk-reward ratio?
To calculate the risk-reward ratio:
Formula:
Risk-Reward Ratio = (Potential Loss) ÷ (Potential Profit)Example:
If your stop loss is $2 below the entry price and your target profit is $6 above the entry, the ratio is $2 ÷ $6 = 1:3.
Our Reward/Risk Calculator does this instantly for any trade.
What is a good risk-reward ratio for day trading?
A common guideline is at least 1:2 or higher, meaning you aim to earn twice the amount you risk. Many professional traders prefer 1:3 or more, as it allows profitability even if some trades lose. The best ratio depends on your strategy, win rate, and risk tolerance.
How do you calculate reward-to-risk ratio?
Reward-to-risk is the inverse of risk-reward.
Formula:
Reward-to-Risk Ratio = (Potential Profit) ÷ (Potential Loss)Example:
If you risk $100 for a potential $300 profit, your reward-to-risk ratio is 3:1.
Our calculator can show both ratios automatically.
What is a 2:1 risk-reward ratio?
A 2:1 ratio means you are risking $1 to potentially make $2. For instance, risking $100 with a target of $200 profit gives a 2:1 ratio. Many traders consider this the minimum acceptable ratio for consistent profitability.
How do you use risk-reward ratio in trading?
Traders use the risk-reward ratio to decide if a trade is worth entering. A higher ratio means you can afford more losing trades and still remain profitable. For example, with a 1:3 ratio, even if only 40% of trades win, you can still grow your account.
What is a 1:3 risk-reward ratio?
A 1:3 risk-reward ratio means you risk $1 to potentially make $3. For example, risking $50 with a potential $150 reward. This is a favorable ratio because it allows profitability even with a lower win rate.
What is a 1:1 risk-reward ratio?
A 1:1 ratio means you risk the same amount as your potential profit. For example, risking $100 for a $100 reward. While simple, it requires a high win rate to be profitable long-term, so many traders prefer higher ratios.
How do you calculate risk-reward ratio for forex?
In forex, risk-reward is calculated using pips:
Formula:
Risk-Reward Ratio = Stop Loss (pips) ÷ Take Profit (pips)Example:
If you risk 20 pips with a 60-pip profit target, your ratio is 1:3.
Our Forex Risk/Reward Calculator makes this easy by handling pips and lot sizes automatically.
What is a good risk-reward ratio for swing trading?
Swing traders often aim for higher ratios like 1:3 or 1:4 since trades last longer and profit targets are larger. This allows swing traders to risk small amounts on each trade while capturing bigger moves in the market.
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