Risk/Reward Ratio Calculator
Plug in your entry, stop loss, and target. Instantly see if the R:R makes the trade worth taking.
Inputs
To calculate risk as % of account
How to Calculate Risk/Reward Ratio
The risk/reward ratio tells you whether a trade is worth taking before you enter it. A 1:3 ratio means you're risking $1 to potentially make $3. Anything below 1:2 for most strategies means the math doesn't favor you long-term.
Enter your entry price, stop loss, and profit target. The calculator instantly computes the ratio and shows you the required win rate to break even at that R:R. A 1:2 ratio only needs a 33% win rate to be profitable. A 1:1 ratio needs 50%+.
The best traders don't just look for good setups — they filter setups through R:R. A textbook pattern with a 1:0.5 R:R is a bad trade. A mediocre pattern with a 1:4 R:R can be a great trade. This calculator eliminates the guesswork.
Formula
Risk/Reward Ratio = (Entry Price − Stop Loss) ÷ (Target Price − Entry Price)
Example
You spot a breakout on TSLA at $250. You set your stop loss at $245 and your target at $265.
Risk = $250 − $245 = $5 per share. Reward = $265 − $250 = $15 per share. R:R = $5 ÷ $15 = 1:3.
You only need to win 25% of these trades to break even. If your strategy wins 40-50% of the time, this is a highly profitable setup.
Frequently Asked Questions
What is a good risk/reward ratio for day trading?
Most professional day traders aim for at least 1:2 (risking $1 to make $2). Swing traders often target 1:3 or higher since they hold longer. A 1:1 ratio requires a win rate above 50% to be profitable after commissions.
Should I always use the same risk/reward ratio?
No. Different strategies have different optimal ratios. Scalping might work at 1:1.5 with a high win rate. Breakout trading often targets 1:3+ with a lower win rate. The key is that your ratio and win rate combine to produce a positive expectancy.
How does risk/reward ratio relate to win rate?
They're inversely related for breakeven. At 1:1 you need 50%+ wins. At 1:2 you need 33%+. At 1:3 you need 25%+. The formula is: Breakeven Win Rate = 1 ÷ (1 + Reward/Risk). This calculator shows the breakeven win rate automatically.
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Disclaimer: This calculator is for educational purposes only and does not constitute financial advice. Trading involves substantial risk of loss. Past performance does not guarantee future results. Always do your own research and consult with a licensed financial advisor before making investment decisions.