Risk/Reward Ratio Calculator
Compute the reward-to-risk ratio from your entry, stop, and target, and the win rate you'd need just to break even at that ratio.
Calculator
Formula
- Risk = |Entry − Stop|
- Reward = |Target − Entry|
- Ratio = Reward ÷ Risk
- Break-even win rate = Risk ÷ (Risk + Reward)
How it works
The risk/reward ratio expresses how much you stand to gain relative to how much you stand to lose on a single idea, measured by the distance from entry to target versus entry to stop.
A higher ratio means you can be right less often and still break even. The break-even win rate is the mirror image of the ratio: at 3:1 you only need to be correct 25% of the time to avoid losing money over many trades, ignoring costs.
Ratios describe geometry, not probability. A favorable ratio says nothing about how likely the target is to be reached. This tool computes arithmetic only and is not a recommendation to take any trade.
Example use cases
3:1 setup
Entry $100, stop $95, target $115 → risk $5, reward $15, ratio 3:1, break-even win rate 25%.
1:1 setup
Entry $100, stop $90, target $110 → ratio 1:1, requiring a 50% win rate just to break even.
Frequently asked questions
Is a higher risk/reward ratio always better?+
Not necessarily. A higher ratio usually comes with a lower probability of hitting the target. What matters over many trades is expectancy — the combination of win rate and average win/loss — which you can explore with the Expectancy Calculator.
Does this include fees and slippage?+
No. Real costs widen the effective break-even win rate. Treat the output as a pre-cost approximation.