Risk / reward calculator
Enter your entry, your stop and your target. It returns the reward-to-risk ratio and, more usefully, the win rate that ratio needs before the trade is even worth taking.
Risk / Reward Calculator
Ratio is only half the answer
Everyone quotes the ratio. Almost nobody quotes the number that follows from it: the win rate you need to break even. That is what decides whether a setup can survive.
Breakeven win rate = 1 ÷ (1 + reward-to-risk)
| Reward : risk | Win rate needed to break even |
|---|---|
| 1 : 1 | 50% |
| 1 : 2 | 33% |
| 1 : 3 | 25% |
| 1 : 5 | 17% |
At 1:3 you can be wrong three times out of four and still not lose money. That is the entire argument for letting winners run — it buys you the right to be wrong often.
Longs and shorts
Switch direction at the top of the calculator. For a long, the stop sits below entry and the target above; for a short, the other way round. If the numbers are on the wrong side the calculator says so rather than returning a ratio that cannot exist.
Questions people ask
What is a good risk reward ratio?
Anything below 1:1 is fighting you. 1:2 is a common working minimum, and 1:3 gives real cushion because it only needs a 25% win rate to break even. The right answer depends on how often your setup actually wins.
How do you calculate risk reward ratio?
Risk is the distance from entry to stop; reward is the distance from entry to target. The ratio is reward divided by risk. A $5 stop and a $15 target is 1:3.
What win rate do I need at 1:2?
About 33% to break even before costs. Anything above that is profit, and anything below is a slow loss even though the ratio looks respectable.
Does a high ratio make a strategy good?
No. A 1:10 target you never reach is worse than a 1:2 target you hit regularly. The ratio only matters alongside the win rate you actually achieve over a real sample of trades.
Keep the numbers after you close the tab
These calculators do the arithmetic once. The Trader's Edge journal is the same maths as a 64-page workbook plus a spreadsheet that sizes every position for you, and the strategy write-ups explain the reasoning behind all of it.