Free calculator
Risk/Reward Ratio Calculator
See how much a trade could make compared with what it could lose, and what that ratio means for how often it has to work.
- Risk : reward
- 1 : 3
- Break-even win rate
- 25%
- Risk
- 5 (5%)
- Reward
- 15 (15%)
- Direction
- Long (buy)
Trades like this need to win at least 25% of the time to break even, before fees.
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How it works
- Risk = the distance from the entry to the stop loss.
- Reward = the distance from the entry to the target.
- Ratio = reward ÷ risk, written as 1 : ratio.
- Break-even win rate = 1 ÷ (1 + ratio). Below that win rate, trades like this lose money over time, before fees.
Example: Entry 100, stop 95 and target 115 risk 5 to make 15, so the ratio is 1 : 3. Trades like that need to win at least 25% of the time to break even, before fees.
Questions
What is a good risk/reward ratio?
There is no single good number. A higher ratio needs fewer winning trades to break even, but a far-away target is reached less often. The ratio only means something together with how often trades like it actually work.
How does it know if the trade is long or short?
From the stop loss. A stop below the entry means a long (buy) trade, a stop above it means a short (sell) trade. The target has to be on the other side of the entry.
Does it include fees?
No. Fees and the spread make the real break-even win rate a little higher than the result shown.
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Educational only. The results are arithmetic on the numbers you enter, not financial advice or trading signals. They do not include fees, spread or slippage.