Risk/Reward Ratio Calculator
Free risk/reward calculator. Enter entry, stop, and target prices to see your R:R ratio and the breakeven win rate. Works for long and short trades.
See Your R:R and Breakeven Win Rate
Enter your entry, stop, and target prices and the calculator returns the reward-to-risk ratio plus the win rate you need just to break even. It works for both long and short trades.
How to Calculate the Risk/Reward Ratio
Risk per share is the distance from entry to stop. Reward per share is the distance from entry to target. The risk/reward ratio is reward divided by risk.
R:R = (target - entry) / (entry - stop) for a long trade. For a short, flip both sides: (entry - target) / (stop - entry).
Example: buy at $50 with a stop at $48 and a target at $56. Risk is $2, reward is $6, so the trade is 3:1. You need to win just 25% of the time to break even.
Breakeven Win Rate by Risk/Reward Ratio
Breakeven win rate = 1 / (1 + R:R).
| Risk/Reward | Breakeven win rate |
|---|---|
| 1:1 | 50.0% |
| 1.5:1 | 40.0% |
| 2:1 | 33.3% |
| 3:1 | 25.0% |
| 4:1 | 20.0% |
| 5:1 | 16.7% |
Know the Win Rate a Setup Demands
A 1:3 risk/reward setup only needs to win about a quarter of the time to be profitable. Use this alongside the required win rate and expectancy calculators to judge whether a strategy is worth trading.
Risk/Reward FAQ
What is a good risk/reward ratio?
Most professional traders set a minimum of 2:1, meaning the potential reward is at least twice the risk. Many discretionary traders look for 3:1 or higher. Below 1:1 you need a very high win rate to be profitable.
How does risk/reward relate to win rate?
The higher your risk/reward ratio, the lower the win rate you need to break even. Breakeven win rate = 1 / (1 + R:R), so 1:1 needs 50%, 2:1 needs 33.3%, 3:1 needs 25%, and 4:1 needs 20%.
Should I always wait for high risk/reward setups?
Not necessarily. A 5:1 setup that fails 90% of the time is worse than a 2:1 setup that wins 60% of the time. The combination of risk/reward and win rate, called expectancy, is what matters.
How do I count partial exits in risk/reward?
Use the weighted-average R achieved. If you exit 50% at 1R and the rest at 3R, your weighted R is (0.5 x 1) + (0.5 x 3) = 2R. TradeTally calculates this automatically on every trade.
Why does my actual P&L not match the calculator?
Real P&L includes commissions, slippage, and fills that rarely land exactly at your stop or target. The calculator gives the theoretical ratio; a trading journal shows what you actually capture.