Set your entry price
Start with the price where you expect to open the position.
Back to All CalculatorsRISK REWARD CALCULATOR
Risk to Reward Calculator
Plan trades with clarity before you enter. See how much you stand to risk, how much you could make, and the win rate your setup needs to break even.
Risk to reward ratio measures the distance from entry to your take profit against the distance from entry to your stop loss. Divide the entry-to-take-profit distance by the entry-to-stop-loss distance; risk $1 to pursue $2 and the result is 1:2.
Position type
Trade setup
Risk / reward analysis
Risk : Reward1 : 2.5
Potential Loss-$500.00
Potential Profit+$1,250.00
Risk per Unit$5.00
Reward per Unit$12.50
Break-even Win Rate28.6%
Use the result as a checkpoint before entry: it connects the distances on your chart with the dollars at stake, so you can reject a setup that needs an unrealistic target.
THE BASICS
How to Calculate Risk to Reward Ratio
Build the calculation from the same prices you use for your trade plan. The process is quick once the levels are clear.
Set your stop loss
Place the stop where the trade idea is invalidated; that distance is your risk.
Set your take profit
Choose a target with a credible path from the entry; that distance is your potential reward.
Read your results
Compare potential reward with potential risk, then check the break-even win rate. Risk Reward Ratio = Potential Reward ÷ Potential Risk.
FIND YOUR EDGE
What Is a Good Risk to Reward Ratio?
A good ratio gives your strategy room to be wrong while preserving a positive expectancy. The best choice is the one your setup can reach consistently.
| Ratio | Break-even win rate | What it means |
|---|---|---|
| 1:1 | 50.0% | One win covers one loss |
| 1:1.5 | 40.0% | Modest reward with a balanced threshold |
| 1:2 | 33.3% | Two units of reward per unit of risk |
| 1:2.5 | 28.6% | Useful when the target remains practical |
| 1:3 | 25.0% | More room for losing streaks |
| 1:4 | 20.0% | Requires a realistic distant target |
| 1:5 | 16.7% | Powerful only when the setup supports it |
THINK IN EXPECTANCY
Why Risk to Reward Matters More Than Win Rate
Win rate tells you how often a strategy is right, but it does not show how much each win or loss contributes. Risk reward keeps the payoff attached to that percentage, so a lower hit rate can still support a healthier expectancy.
For example, 40% winners at 1:3 produce +6R across ten trades before costs, or +0.6R per trade. An 80% win rate at 1:0.5 produces +2R over the same ten trades, or +0.2R per trade. The more useful question is how often your plan wins and what each outcome is worth.
TRADE PLAN CHECK
Common Risk to Reward Mistakes
Moving the stop to improve the ratio
Changing your stop after seeing the target can make the ratio look better while increasing the real risk.
Using an unrealistic target
A target only helps when the market has a credible path to reach it within your trading horizon.
Ignoring costs and slippage
Fees and execution can reduce the reward you actually receive, especially on small or short-term trades.
Changing size after a loss
Keep position size tied to your risk plan instead of trying to recover a previous trade emotionally.
FAQ
Risk Reward Calculator FAQ
What is a good risk reward ratio?
There is no single ratio that fits every strategy. Many traders start by looking for at least 1:2, then confirm that the setup, market conditions, and execution rules support the distance to the target.
How do I calculate risk reward ratio?
Measure the distance from your entry to the stop and from your entry to the target. Divide the reward distance by the risk distance. Position size scales the dollar amounts but does not change the price ratio when there are no trading costs.
Should I use the same ratio for every trade?
A consistent process is more useful than forcing every chart into the same number. Let the structure of the setup define a realistic stop and target, then skip trades where the available reward does not justify the risk.
Does a higher ratio mean a better trade?
A higher ratio can be attractive, but only when the target is realistic. A distant target that is rarely reached can make a high ratio less useful than a smaller, repeatable target.
What does the break-even win rate mean?
It is the percentage of winning trades you need to cover the average loss and average profit at this ratio, before fees, slippage, and other execution costs. Your actual edge still depends on how consistently the plan is followed.
Can I use this calculator for short trades?
Yes. Select Short, then put the stop above the entry and the target below the entry. The calculator keeps the dollar risk and reward positive while respecting the direction of the trade.
Does position size change the risk reward ratio?
Position size changes the amount you can lose or make. It does not change the price relationship between the stop and target, so the ratio stays the same when both sides use the same position size.
KEEP YOUR EDGE VISIBLE
Start journaling free Turn every trade plan into a clear record.
BitStat helps you review the decisions behind your trades, so you can see which setups earn their place in your process.