Risk-Reward Ratio Calculator
Trade R:R analysis.
Calculate risk-reward ratio and break-even win rate for any trade using entry price, stop loss, and profit target inputs.
What this tool does
Risk-reward ratio measures the relationship between potential profit and potential loss on a trade. Enter your entry price, target price, and stop loss level, and the calculator returns two outputs: the ratio itself (showing how much upside potential exists relative to downside risk) and the break-even win rate (the minimum percentage of winning trades needed to avoid losses over time, assuming consistent position sizing). The ratio is calculated by dividing the distance to your target by the distance to your stop loss. This tool illustrates how these metrics interact and helps traders model different entry and exit scenarios. Results are for educational illustration only and assume fixed position sizes with no slippage or fees.
Enter Values
People also use
Investing
Position Sizing Calculator
Calculate the optimal position size for a trade based on account size, risk-per-trade percentage, and your stop-loss distance.
Investing
Kelly Criterion Calculator
Calculate the Kelly Criterion optimal bet size for positive expected value bets, from win probability, payoff multiple, and bankroll.
Investing
Price-to-Sales Ratio Calculator
Calculate Price-to-Sales ratio for company valuation analysis. Enter share price and revenue per share to see p/s ratio from price and revenue or market cap.
Formula Used
Spotted something off?
Calculations or display — let us know.
Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Risk-reward ratio compares potential reward to potential risk per trade. Formula: (target price - entry) / (entry - stop loss). Aim for 2:1 or better - reward at least 2x the risk. 50 entry, 55 target, 45 stop = 5 reward / 5 risk = 1:1 (poor). 50 entry, 60 target, 45 stop = 10 / 5 = 2:1 (good).
Example: stock at 100, target 120, stop 90. Reward = 20, Risk = 10. R:R = 2:1. Need win rate >33% to be profitable (1/(1+2) = 33% break-even). At 50% win rate: profitable. At 60% win rate: highly profitable. Lower R:R requires higher win rate; higher R:R can be profitable with lower win rate.
R:R + win rate = expected value: EV = (Win% × Reward) - (Loss% × Risk). 50% win rate, 2:1 R:R: EV = (0.5 × 2) - (0.5 × 1) = +0.50 per 1 risked. Positive EV = profitable strategy. Most successful traders combine: high R:R (2:1+) with moderate win rate (40-60%). Strategies needing 70%+ win rate (low R:R) rarely survive long-term.
Quick example
With entry price of 100 and target price of 120 (plus stop loss of 90), the result is 2.00:1. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter Entry Price, Target Price, and Stop Loss. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.
What's happening under the hood
R:R = (target - entry) / (entry - stop). Break-even win rate = 1/(1 + R:R). The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
Using this well
What this doesn't capture
Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.
Entry ££100, Target ££120, Stop ££90 = 2.00:1.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
The calculator computes the risk-reward ratio by dividing potential profit by potential loss. Specifically, it subtracts the entry price from the target price to find upside distance, then subtracts the stop-loss price from the entry price to find downside distance. The ratio is the upside divided by the downside. The calculator also derives a break-even win rate by applying the formula 1/(1 + R:R), which models the minimum win frequency needed to offset losses at the specified ratio. The model assumes linear price movement between entry and target levels, constant position sizing, and no transaction costs or slippage. It does not account for market volatility, execution risk, or the probability of reaching either target or stop-loss prices.
References
Frequently Asked Questions
Best R:R for trading?
How to set stops/targets?
R:R vs win rate trade-off?
Why R:R alone isn't enough?
Related Calculators
Position Sizing Calculator
Calculate the optimal position size for a trade based on account size, risk-per-trade percentage, and your stop-loss distance.
Kelly Criterion Calculator
Calculate the Kelly Criterion optimal bet size for positive expected value bets, from win probability, payoff multiple, and bankroll.
Price-to-Sales Ratio Calculator
Calculate Price-to-Sales ratio for company valuation analysis. Enter share price and revenue per share to see p/s ratio from price and revenue or market cap.
More Investing Calculators
Investing
100 Minus Age Asset Allocation Calculator
Calculate stock-vs-bond allocation using the 100-minus-age rule of thumb — see the suggested percentage split for any age you put in.
Investing
Active vs Passive Investing Calculator
Compare active and passive investment strategies accounting for fees across long horizons — the wealth gap from a percentage point of fee drag.
Investing
Annuity Present Value Calculator
Calculate the present value of an ordinary annuity from regular payments, periodic rate, and the number of periods until the stream ends.
Investing
APR to APY Calculator
Convert APR to APY for any compounding frequency to see the true effective annual yield — what you actually earn (or pay) on a given quoted rate.
Investing
Art Investment Calculator
Calculate art investment net returns including insurance and carrying costs, given purchase price, current value, and length of holding period.
Investing
Asset Allocation Calculator
Calculate suggested portfolio asset allocation by age and risk tolerance (stocks/bonds/cash). Enter risk tolerance 1-10 to see suggested stock and bond.
Explore Other Financial Tools
E-commerce & Marketplace
Cart Abandonment Revenue Loss Calculator
Calculate cart abandonment revenue loss by month or year, plus the recoverable amount your email recovery sequences could win back.
Lifestyle
Car Maintenance Annual Cost Calculator
Calculate all-in annual car maintenance costs including service, tyres, MOT, and repairs. Enter tyres annualised to see annual maintenance total.
Major Purchases
Bathroom Renovation Cost Calculator
Calculate realistic bathroom renovation cost including materials, fittings, labour, plumbing, and contingency for unexpected extras.