Calculate R:R ratio, breakeven win rate, and position sizing. Visualize your trade setup instantly.
R:R Ratio
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Input the price at which you plan to enter the trade. This is the current market price or your limit order price. For example, if buying shares of a stock at $100, enter 100 as the entry price.
Enter the price where you will exit to limit losses. For a long trade, the stop loss is below entry. For a short trade, it is above entry. Example: buying at $100 with a $95 stop loss means you are risking $5 per share.
Enter the target price where you will take profits. For a long trade, take profit is above entry. For a short, it is below. Example: buying at $100 with a $110 take profit means you stand to gain $10 per share.
The calculator instantly shows your R:R ratio, breakeven win rate, risk and reward amounts, and a visual chart of your trade setup. A ratio of 1:2 or higher is generally considered favorable. The breakeven win rate tells you how often you need to win for the strategy to be profitable.
Understanding risk/reward in trading
The risk/reward ratio (R:R ratio) is one of the most fundamental concepts in trading and investing. It compares the potential loss of a trade to its potential gain, expressed as a ratio like 1:2 or 1:3. Understanding and consistently applying risk/reward analysis is what separates profitable traders from those who lose money over time.
The risk/reward ratio is calculated with a straightforward formula:
Risk/Reward Ratio = |Take Profit - Entry| / |Entry - Stop Loss|
For example, if you enter a long trade at $100 with a stop loss at $95 and a take profit at $115:
This means for every $1 you risk, you stand to gain $3.
The breakeven win rate tells you the minimum percentage of trades you need to win for the strategy to be profitable at a given R:R ratio. The formula is:
Breakeven Win Rate = 1 / (1 + R:R Ratio) x 100
At a 1:2 risk/reward ratio, you only need to win 33.3% of your trades to break even. At 1:3, you only need 25%. At 1:1, you need 50%. This is why a higher R:R ratio is so powerful: it allows you to be wrong more often and still remain profitable.
Mathematical edge. A trader with a 40% win rate and a consistent 1:3 R:R ratio is profitable. Over 100 trades risking $100 each: 40 winners x $300 = $12,000 gained, 60 losers x $100 = $6,000 lost. Net profit: $6,000. The R:R ratio provides a mathematical framework for profitability regardless of win rate.
Emotional discipline. Pre-defining risk and reward before entering a trade removes emotion from exit decisions. You know exactly when to cut losses and when to take profits. Without a plan, traders often hold losers too long (hoping for recovery) and cut winners too short (fear of giving back gains).
Portfolio consistency. Applying a minimum R:R threshold (such as 1:2) across all trades creates consistent expectancy. Even during losing streaks, the math works in your favor over a large enough sample of trades. Professional traders and hedge funds use risk/reward analysis as a core component of their trading systems.
Position sizing integration. Risk/reward works hand-in-hand with position sizing. Once you know your risk per trade (the distance to your stop loss), you can calculate the exact position size to risk a fixed percentage of your account. For instance, risking 1% of a $50,000 account means $500 risk. If your stop loss is $5 away, your position size is 100 shares. This keeps drawdowns manageable.
This tool calculates all of these metrics instantly from your entry, stop loss, and take profit prices, and provides a visual representation of the trade setup.
How traders use risk/reward analysis
Evaluate intraday trade setups by calculating risk/reward before entering. Ensure every trade meets your minimum R:R threshold (e.g., 1:2) to maintain positive expectancy across hundreds of daily trades.
Analyze swing trade setups on daily charts where positions are held for days to weeks. Higher timeframes typically allow for wider stops and larger reward targets, making 1:3 or better R:R ratios achievable.
Calculate pip-based risk/reward for forex scalps. Forex traders often work with tight stops and need precise R:R calculations to ensure their strategy remains profitable at high trade frequencies.
Evaluate longer-term crypto positions where volatility demands wider stops. Crypto's large price swings can yield exceptional R:R ratios on position trades, but require disciplined stop placement.
Assess aggregate risk/reward across multiple open positions. Understanding the combined R:R profile of your portfolio helps manage overall exposure and ensures no single trade dominates account risk.
Dynamically recalculate risk/reward as trailing stops move to protect profits. Understanding how your R:R changes as a trade progresses helps decide when to tighten stops and when to let winners run.
Master risk/reward calculations
This tool calculates the risk-to-reward ratio for any trade setup across stocks, forex, crypto, futures, and other markets. Enter your entry price, stop loss, and take profit to see instant analysis including R:R ratio, breakeven win rate, and visual trade layout.
Entry Price: The price at which you plan to enter the trade. This can be the current market price for a market order, or a limit price for a pending order. All other calculations are relative to this price.
Stop Loss Price: The price at which you will exit to limit your loss. For long trades, the stop loss is placed below the entry price. For short trades, it is above. Your stop loss should be placed at a level that invalidates your trade thesis -- below support for longs, above resistance for shorts.
Take Profit Price: The target price where you plan to take profits. For long trades, this is above entry. For shorts, below entry. Set your take profit at realistic levels based on technical analysis: next resistance for longs, next support for shorts, or based on measured moves and chart patterns.
R:R Ratio: Displayed as 1:X where X is how many dollars of reward for each dollar of risk. A ratio of 1:2 means you gain $2 for every $1 risked. Higher is better, but must be realistic based on market structure.
Risk Amount: The dollar distance from entry to stop loss. This is the maximum you can lose per unit on the trade (excluding slippage and gaps).
Reward Amount: The dollar distance from entry to take profit. This is what you stand to gain per unit if the target is reached.
Breakeven Win Rate: The minimum win percentage needed for profitability at this R:R. Lower is better. A 33% breakeven win rate means you can lose 2 out of 3 trades and still break even.
The horizontal bar chart shows your stop loss, entry, and take profit as vertical markers on a price axis. The red zone represents your risk (entry to stop loss) and the green zone represents your reward (entry to take profit). This gives you an intuitive visual sense of how much room you have on each side.
Use the preset buttons to quickly load common trade setups:
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