Risk/Reward Ratio Calculator
Calculate risk/reward ratio and required win rate for your trades
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What is this tool?
The Risk/Reward Calculator helps traders evaluate the mathematical edge of a trade before entering. Input entry price, stop loss, take profit, and position size to calculate the risk-to-reward ratio, risk percentage, reward percentage, required win rate, and overall trade evaluation.
How to use
- 1
Set entry and exits
Input entry price, stop loss level, take profit target, and trade direction (long/short).
- 2
Enter position size
Specify how many units or shares you plan to trade.
- 3
Review trade analysis
See risk/reward ratio, risk %, reward %, required win rate for profitability, and trade evaluation.
Frequently Asked Questions
What risk/reward ratio should I target?
A minimum of 1:2 is commonly recommended. A 1:3 ratio is excellent. This means you risk $1 to potentially gain $2 or $3. With a 1:2 ratio, you only need a 33% win rate to break even.
How is required win rate calculated?
Required win rate = 1 / (1 + risk/reeward ratio). For a 1:3 ratio, you need only 25% wins to break even. Higher ratios mean lower required win rates.
Does a good ratio guarantee profit?
No—a good ratio improves your mathematical edge but does not guarantee individual trade outcomes. Consistent profitability requires both good risk/reeward and sufficient win rate over many trades.