Risk to Reward Ratio Calculator [Free Tool]
See how much you stand to gain for every dollar you risk — plus the breakeven win rate it implies. Enter three prices and judge the trade before you take it.
Disclaimer: Trading financial instruments involves risk, and everything on this page is provided for educational purposes only. Nothing here is financial advice or a recommendation to buy or sell any instrument.
Risk per unit
10.00 (10.00%)
Reward per unit
20.00 (20.00%)
That is the minimum win rate you need just to break even (no profit, no loss) at this risk-reward ratio.
Formula: Breakeven Win Rate = 1 ÷ (R:R + 1). A higher R:R lowers this threshold.
Good — a 1:2+ ratio is widely considered healthy.
How is this calculated?
Risk = |Entry − Stop Loss|
Reward = |Take Profit − Entry|
Risk-Reward Ratio = Reward ÷ Risk
Read the full user guide
Every parameter, formula, and worked example — a complete reference for this tool.
What is the risk-to-reward ratio?
The risk-to-reward ratio (R:R) compares how much you stand to lose on a trade with how much you stand to gain. It answers one question before you commit: is the potential reward worth the risk you are taking? A trade with a 1:3 ratio risks one unit to make three, which means you only need to be right a fraction of the time to stay ahead. The calculator below works the ratio out from your entry, stop, and target, and also shows the breakeven win rate — the hit rate a trade needs for the numbers to make sense over many repetitions.
Key concepts
Risk
The distance between entry and stop, measured in price or dollars.
Reward
The distance between entry and target, measured the same way.
Breakeven win rate
The win rate needed to break even at a given R:R — lower required win rate means more room for losses.
A worked example with real numbers
- 1
Enter the three prices
You are long at $100, your stop is $95, and your target is $115. Risk is $5 and reward is $15.
- 2
Divide reward by risk
$15 ÷ $5 = 3, so the trade is a 1:3 risk-to-reward setup. You are risking one unit to make three.
- 3
Read the breakeven win rate
At 1:3 the breakeven rate is 25%. You only need to win one in four trades to stay at zero — the rest is upside.
- 4
Compare with your real win rate
If you win 40% of similar setups, a 1:3 trade is comfortably profitable on average; at a 1:1 ratio the same 40% would break exactly even.
How to use it
Enter entry, stop and target
The three prices that define the trade.
Read the R:R
The calculator expresses reward divided by risk, e.g. 1:2.
Check the breakeven win rate
See how often you must win for the trade to pay off on average.
The formula, step by step
Risk-to-reward
R:R = Reward distance ÷ Risk distance
Reward = |target − entry|, risk = |entry − stop|.
Breakeven win rate
Win rate = 1 ÷ (R:R + 1)
For a 1:2 trade, breakeven is ~33%.
Mistakes traders make
✗ Picking an unrealistic target just to make the R:R look good
✓A 1:10 target that is never reached is worthless. The ratio is only as good as the price levels behind it, so both must be structurally plausible.
✗ Judging a trade by R:R alone without the win rate
✓R:R sets the breakeven bar; your actual win rate decides whether you clear it. The two numbers only make sense together.
✗ Using the ratio after the trade to justify a bad decision
✓R:R is a planning tool. Once the trade is on, manage it by your rules, not by recalculating a prettier ratio to feel better about holding.
When this tool fits — and when it does not
Use it when
- ✓Before entry, as a quick filter for whether a setup's payoff is worth the risk.
- ✓When comparing several candidate setups to see which has the most favorable math.
- ✓When journaling trades, to understand whether your wins are large enough relative to losses.
Skip it when
- ✗Forcing every trade into a fixed minimum ratio that rejects good, high-probability setups.
- ✗Trading a ratio on its own without a defined stop and target on the chart.
- ✗Using it as a hard rule on trades where structure suggests a natural, nearer target.
Practical tips that actually help
Let structure set both prices, then compute the ratio
Measure the ratio last. If you pick the ratio first and force prices to fit, you are fitting the market to your rule instead of the rule to the market.
Track your actual R, not the planned R
Slippage and partial fills change the realized ratio. Over time, your real average R across trades matters far more than any single planned number.
Use the breakeven rate as a reality check
If a setup's breakeven win rate is higher than what you historically achieve, the math says the trade is not for you yet.
Related & next steps
Frequently asked questions
What R:R is good?▾
There is no universal answer. A higher ratio tolerates a lower win rate, but the ratio must fit the strategy and what the market actually offers.
Is a high R:R always better?▾
Not in isolation — a very high target may rarely be reached, reducing win rate. R:R must be judged together with win rate.
How do I calculate R:R from three prices?▾
Subtract your stop from your entry for the risk, and your target from your entry for the reward, then divide reward by risk. The calculator does this for you and reports the result as a ratio like 1:2.
What does the breakeven win rate tell me?▾
It is the win rate that exactly offsets your average loss. For a 1:2 trade the breakeven rate is roughly 33%, meaning you can lose twice as often as you win and still break even — useful for judging whether a setup is forgiving enough to trade.
Should I reject every trade below a certain ratio?▾
A fixed minimum is a common filter, but it can reject good trades that simply have a nearby, well-placed target. Treat the ratio as one input alongside the win rate, the context, and how often the target is realistically reached.
Why do real trades rarely hit the exact planned ratio?▾
Slippage, spread, and partial fills move your effective entry, stop, and exit from the planned prices. The ratio you plan is a proxy; the ratio you actually get is what matters, which is why costs belong in the calculation.
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Risk-to-reward is an educational planning metric, not a prediction of outcomes. Real fills and slippage change the effective numbers.
Disclaimer: The tools and content on this site are provided for educational purposes only and do not constitute investment advice. Trading and investing involve a substantial risk of loss, and past performance does not guarantee future results.