Risk/Reward Ratio Calculator
Enter your entry, stop-loss and target. This returns the risk/reward ratio of the trade and — more usefully — the win rate you would need for that ratio to break even over a large sample.
Risk/reward = |Target − Entry| ÷ |Entry − Stop| · Break-even win rate = 1 ÷ (1 + R:R)
- Risk / reward
- 3.00 : 1
- Break-even win rate
- 25.0%
- Risk per unit
- $4.00
- Reward per unit
- $12.00
At 3.00:1 you need to win more than 25.0% of these trades just to break even — before commissions, fees and slippage, which all push the real requirement higher.
Free to use, no sign-up. Nothing you type here is sent anywhere — the calculation runs entirely in your browser.
Risk/reward means nothing without a win rate
A 3:1 trade is not automatically better than a 1:1 trade. What matters is whether your win rate clears the bar that ratio sets. At 1:1 you need to win more than 50% of the time to make money. At 3:1 you only need to win more than 25%.
This is why chasing ever-larger reward ratios is not free: targets further away are hit less often. Pushing from 2:1 to 5:1 raises the payoff but lowers the win rate, and the two can easily cancel out — or leave you worse off.
Break-even win rates at common ratios
At 1:1 you need 50%. At 1.5:1, 40%. At 2:1, 33.3%. At 3:1, 25%. At 5:1, 16.7%. These are break-even points before costs — commissions, fees and slippage all push the real requirement higher.
Compare the figure this calculator gives you against your actual win rate from your own trade history, not against what you hope it will be. That comparison is the whole point of the number.
Planned versus actual
The ratio you calculate before entering is the planned one. What determines your results is the realised ratio, and the two diverge whenever a stop gets moved or a winner is cut early.
A journal that records both planned and actual lets you see that gap. If your planned 3:1 trades are realising closer to 1:1, the problem is not the strategy — it is the execution, and no change to your entry criteria will fix it.
Frequently asked questions
How do you calculate risk/reward ratio?
Divide the distance from entry to target by the distance from entry to stop. Entry at $100, stop at $96 and target at $112 gives $12 ÷ $4 = a 3:1 risk/reward ratio.
What is a good risk/reward ratio?
There is no universally good ratio — it only means something paired with your win rate. A 1:1 ratio needs a win rate above 50% to be profitable; 3:1 needs only 25%. A ratio is good when your actual historical win rate clears its break-even point with room to spare.
Is a higher risk/reward ratio always better?
No. More distant targets get hit less often, so raising the ratio lowers the win rate. The combination that maximises expectancy is usually somewhere in the middle rather than at the extreme, and only your own trade history can tell you where.
How does risk/reward relate to expectancy?
Expectancy combines both: (win rate × average win in R) − (loss rate × average loss in R). Risk/reward describes the size of the payoff; expectancy tells you whether the payoff and the hit rate together produce an edge.