Risk/Reward Calculator
Evaluate trade setups by calculating your risk vs reward ratio. Know your potential profit before entering a trade.
Price at which you enter the trade
Price where you exit to limit loss
Price where you exit to take profit
For calculating actual risk/reward amounts
Risk/Reward Ratio
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risk : reward
Risk (if SL hit)
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Reward (if TP hit)
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Trade Quality
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How to Use This Calculator
Step-by-Step Guide
- Enter Entry Price: The price at which you plan to enter the trade.
- Enter Stop-Loss: The price where you'll exit if the trade goes against you.
- Enter Take-Profit: The price where you'll exit with profit.
- Add Position Size (optional): To see actual risk/reward amounts in currency.
Understanding Risk/Reward Ratio
The risk/reward ratio compares the potential loss (risk) to the potential profit (reward) of a trade:
- 1:2 ratio: You risk $1 to potentially make $2 (good)
- 1:3 ratio: You risk $1 to potentially make $3 (excellent)
- 1:1 ratio: You risk $1 to make $1 (break-even expectation)
- 2:1 ratio: You risk $2 to make $1 (poor)
Trade Quality Scoring
High-quality setup. Win rate needed: 25%+
Solid setup. Win rate needed: 33%+
Marginal edge. Win rate needed: 50%+
Unfavorable. Consider skipping.
Frequently Asked Questions
Most professional traders aim for at least 1:2 risk/reward ratio, meaning they risk $1 to potentially make $2. This allows them to be profitable even with a win rate below 50%. A 1:3 ratio is considered excellent and provides even more cushion for losses.
With a 1:1 R:R ratio, you need a 50% win rate to break even. At 1:2, you only need 33% win rate. At 1:3, just 25% win rate is needed. This is why professional traders focus on R:R—they can be profitable even when wrong most of the time.
Not necessarily. Very high R:R trades (1:5+) often have lower probability of hitting the take-profit. The key is finding a balance between R:R and win rate that works for your trading style. Many successful traders prefer consistent 1:2 or 1:3 setups.
Yes! Traders often move their stop-loss to break-even once the trade moves in their favor. Some also trail their stop-loss or take partial profits to lock in gains. These techniques can improve the realized R:R, though they may also affect win rate.