Risk-Reward Ratio Calculator
Is the reward worth the risk?
A free risk-reward calculator: enter your entry, stop-loss, and target to get the R:R ratio and the exact win rate you need to break even. Updates live — no signup, nothing saved.
Enter your entry, stop-loss, and target to see the risk-reward profile.
Step by step
How to use this risk-reward calculator
Enter your entry, stop, and target
All three must be decided before the trade, from the chart — not moved afterwards to make the ratio look better. The stop is where the idea is wrong; the target is where it has played out.
Read the R:R ratio
1:2 means you risk one dollar to make two. Anything below 1:1 deserves a hard look — you're paying more than the trade can pay you back.
Check the breakeven win rate against your record
This is the honest test. If the calculator says you need to win 40% of the time and your logged trades win 30%, the setup loses money no matter how it feels.
Optionally, size the position
Add your account size and risk percentage to see how many shares the trade allows and the dollar amounts at stake. Or use the position size calculator for the full breakdown.
The asymmetry trade
Why risk-reward is the first number to check
Every trade is a bet with two sides: what it costs when you're wrong and what it pays when you're right. The risk-reward ratio puts those two numbers side by side before the money is committed. It's not a prediction — it's a filter. Trades that fail the filter never get taken, which is where most of its value comes from.
The ratio also exposes a common self-deception. When a trade feels certain, the temptation is to move the target further out or the stop tighter until the ratio looks attractive — retrofitting the numbers to a decision already made. That's overconfidence bias working on the math instead of the market. And when the ratio is poor but you take the trade anyway because you're already mentally in it, confirmation bias is usually doing the talking.
Pair the ratio with position sizing and you have the two mechanical decisions that matter most: whether to trade at all, and how much. Everything else is execution.
Questions
Risk-reward, answered
What is a risk-reward ratio?
The risk-reward ratio compares how much a trade can lose to how much it can make. If your stop is $2 below your entry and your target is $6 above it, you're risking $2 to make $6 — a 1:3 risk-reward ratio. It answers the question every trade should answer before entry: is the potential reward worth the risk I'm taking?
What is a good risk-reward ratio?
Most disciplined traders look for at least 1:2 — risking one dollar to make two — and many won't take a trade below 1:3. The right minimum depends on your win rate: a strategy that wins 60% of the time can be profitable at 1:1, while a 30% win-rate strategy needs closer to 1:3 just to break even. The breakeven win rate this calculator shows is the exact line.
How is breakeven win rate calculated?
Breakeven win rate = 1 ÷ (1 + reward ÷ risk). At 1:2 risk-reward, that's 1 ÷ 3 = 33.3% — win more than a third of your trades and the strategy is profitable before costs. At 1:1 you need to win more than half. It's the single most useful number for judging whether a trade setup fits your actual track record.
Is a higher risk-reward ratio always better?
No — a 1:10 ratio means nothing if the target is unrealistic and almost never gets hit. Risk-reward only works when paired with an honest estimate of how often the trade actually wins. A modest 1:2 with a 50% win rate beats a fantasy 1:10 with a 5% win rate. Judge the two numbers together, never the ratio alone.
Does risk-reward apply to options?
Yes, but the inputs are different: instead of entry/stop/target prices, use the option's max loss (premium paid for a long option or spread) and max profit. The ratio and breakeven win rate work the same way. For a full picture of an options trade's payoff at every price, use the options profit calculator.
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Good ratio, bad reasoning? Check the reasoning.
A clean 1:3 setup can still be built on a biased thesis. Run your thinking through the Bias Checker before you place the trade.
Check My Reasoning