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Risk/Reward Ratio Calculator

Reward-to-risk is the ratio between what a trade can make and what it can lose. Enter three prices — entry, stop and target — and the calculator returns the R:R, along with the win rate that ratio has to clear before the setup is worth taking.

Calculate reward-to-risk

Shares or units, to see the ratio in dollars.

Reward-to-risk
1:3.00
Risk per share
$2.00
Reward per share
$6.00
Total risk
$500
Total reward
$1,500
Breakeven win rate
25.0%

Breakeven win rate is the share of trades this ratio has to win before the setup makes money, ignoring costs. Commission and slippage come out of the reward leg, so the real bar sits slightly higher.

Planned 1:3. What did you actually take?

The gap between the ratio you plan and the R you realise is where most edges leak. tradempower computes both on every closed trade and shows you the distribution. Seven days of Pro, no card.

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How to calculate a risk/reward ratio

Reward-to-risk is a ratio of two distances, both measured from the entry price:

  1. Risk = |entry − stop|. Entering at $100 with a stop at $98 risks $2 per share.
  2. Reward = |target − entry|. A target at $106 offers $6 per share.
  3. R:R = reward ÷ risk. Here that is $6 ÷ $2 = 3, usually written 1:3.

The ratio is scale-free, which is the useful part. It says nothing about how many shares you hold or how large your account is, so a 1:3 setup on a $2,000 account and a 1:3 setup on a $2m account are directly comparable — and can be averaged across a whole trading record.

R multiples: the unit that makes trades comparable

One R is the amount you risked on a trade. A winner that returns three times the risk is +3R; a stop-out is −1R whether the loss was $50 or $5,000. Expressing results in R strips out position size and account growth, so a trade from your first month and one from last week can sit in the same average.

Planned R:R and realized R are different numbers. The first is what the setup offered; the second is what you actually took. A wide gap between them usually means exits, not entries, are the thing to work on.

What counts as a good risk/reward ratio?

The ratio is meaningless on its own — it only means something paired with a win rate. A 1:3 setup needs to win just 25% of the time to break even. A 1:1 setup needs 50%. A scalper winning 70% of trades at 1:0.5 is profitable; a swing trader winning 30% at 1:4 is more profitable still.

So the question is never "is 1:2 good?" but "do I hit this ratio often enough?" The breakeven win rate calculator answers that side of it.

Common mistakes with reward-to-risk

  • Setting the target to reach a ratio. Moving a target to $110 because 1:5 sounds better does not make $110 a place price is likely to trade.
  • Widening the stop after entry. It improves the ratio on paper and destroys it in reality — the risk leg just grew.
  • Quoting planned ratios as results. A record of 1:3 setups means nothing if the average exit is at 1:0.8.
  • Ignoring costs. Spread, commission and slippage all come out of the reward leg, and they hurt tight ratios disproportionately.
  • Chasing high ratios alone. A 1:10 setup that fills 5% of the time is worse than a 1:2 setup that fills half the time.

Tracking R over time

One trade's R:R is a plan. A hundred trades' realized R is an edge, or the absence of one. tradempower computes R on every closed trade automatically and reports the distribution, so you can see whether your average exit matches your average plan.

Risk/Reward Ratio Calculator FAQ

Is a 1:2 risk/reward ratio good?

It is workable: a 1:2 setup breaks even at a 33.3% win rate, so anything above that is profitable before costs. Whether it is good for you depends on how often your 1:2 setups actually reach target. A 1:2 ratio you hit 45% of the time beats a 1:4 ratio you hit 15% of the time.

What is the difference between R:R and R multiple?

R:R is planned — the ratio between your target distance and your stop distance before you enter. An R multiple is realized — what the trade actually returned, measured in units of the risk you took. A trade planned at 1:3 that you close early might return +1.2R.

Does risk/reward include commissions?

Not by default. This calculator works from the three prices, which is how the ratio is normally quoted. Costs come out of the reward leg, so a 1:2 setup with meaningful commission is a little worse than it looks — the effect is largest on short-hold, tight-stop trades.

Should I always aim for at least 1:2?

No. The correct minimum is whatever clears your actual win rate with margin. A high-frequency strategy winning 65% of trades is comfortably profitable at 1:1, and forcing it to 1:2 would simply mean fewer targets are reached.

What if my trade has no target?

Then it has no planned reward-to-risk, and you are relying on an exit rule instead — a trailing stop, a time stop, or a discretionary read. That is a legitimate approach, but it means your edge has to be measured from realized R after the fact rather than planned R before.

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