About the Risk Reward Ratio Calculator
This risk reward ratio calculator tells you, before you place a trade, how much you stand to make for every dollar you are willing to lose. Enter your entry price, stop-loss and profit target, choose long or short, and it returns the reward-to-risk ratio (often called the R multiple), the dollar risk and reward on your position, and the distance to each level as a percentage of the entry.
It is built for swing traders, day traders and options or crypto traders who plan exits in advance. The break-even win rate shows the minimum share of trades that must hit the target for the setup to pay off, and adding your historical win rate turns the ratio into expectancy — the average profit or loss you can expect per trade over many repetitions.
The calculation assumes the stop and target fill at exactly the prices you enter. Real fills can slip past a stop in fast markets or on gaps, and commissions reduce both sides, so treat the result as a planning estimate rather than a guarantee.
With the default inputs, the reward-to-risk ratio is 2.5 R. Change any value above to recalculate instantly.
How to use the risk reward ratio calculator
- 1Choose whether the trade is long (buy first) or short (sell first).
- 2Enter your planned entry price, stop-loss and profit target.
- 3Enter the number of shares, contracts or coins in the position.
- 4Add your historical win rate for similar setups to see expectancy.
- 5Check the break-even win rate — take the trade only if you expect to beat it comfortably.
Formula and method
Risk per share is the distance from entry to the stop-loss, and reward per share is the distance from entry to the profit target. Dividing reward by risk gives the reward-to-risk ratio R; a 2.5 R trade makes two and a half times what it would lose. Multiplying each distance by the position size gives the dollar amounts at stake.
The break-even win rate is risk ÷ (risk + reward), which equals 1 ÷ (1 + R): the fraction of trades that must hit the target for wins and losses to cancel out. Expectancy combines your win rate W with the dollar reward and risk to give the average result per trade. Commissions, spreads and slippage are not included and would lower both the ratio and expectancy.
- R
- Reward-to-risk ratio (R multiple)
- W
- Win rate as a decimal (40% = 0.40)
- Risk
- Loss in dollars if the stop is hit
- Reward
- Profit in dollars if the target is hit
Worked examples
Long stock trade, 2.5 R setup
Buying 100 shares at $50 with a stop at $47 risks $3 a share ($300) to make $7.50 a share ($750) at the $57.50 target — a 2.5 R trade. You only need to win 28.6% of the time to break even, so at a 40% win rate the average trade earns 0.4 × $750 − 0.6 × $300 = $120.
Short trade with a 2:1 target
Shorting 50 shares at $200 with a stop at $206 risks $6 a share, while the $188 target makes $12 a share: a 2:1 ratio. Break-even is 1 ÷ 3 = 33.3%, and a coin-flip 50% win rate gives an expectancy of 0.5 × $600 − 0.5 × $300 = $150 per trade.
A 1:1 scalp with a 45% win rate
Risking $1 to make $1 on 1,000 shares means you need to win more than half the time. At 45% the maths is 0.45 × $1,000 − 0.55 × $1,000 = −$100 per trade, so this setup loses money over time even though each trade looks balanced.
Frequently asked questions
What is a good risk reward ratio?+
Many traders look for at least 1:2 (a 2 R target), which means a strategy can be profitable while winning only about one trade in three. There is no universal best number — a higher ratio usually comes with a lower win rate, so judge a setup by expectancy, not the ratio alone.
How do you calculate risk to reward?+
Subtract the stop-loss from the entry to get risk per share, and subtract the entry from the target to get reward per share (reverse both for a short). Divide reward by risk: an entry of $50, stop of $47 and target of $57.50 gives 7.5 ÷ 3 = 2.5, or 1:2.5.
What is the break-even win rate?+
It is the minimum percentage of winning trades needed for total gains to equal total losses, calculated as 1 ÷ (1 + R). A 1:1 trade needs a 50% win rate, a 1:2 trade needs 33.3% and a 1:3 trade needs 25%, before commissions and slippage.
What does R multiple mean?+
An R multiple expresses a trade result in units of the initial risk. If you risk $200 and make $500, the trade returned 2.5 R; if you are stopped out, it returned −1 R. Tracking results in R lets you compare trades of different sizes.
Should I write the ratio as risk:reward or reward:risk?+
Both conventions are common. “1:3 risk to reward” and “3 R reward to risk” describe the same trade. This calculator shows the reward-to-risk number as R and the risk : reward form next to it to avoid confusion.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.