Educational tool. Not financial advice. Risk/reward ratios don't capture asymmetric outcomes, tail-risk events, or position sizing relative to your total capital.
Risk/Reward Ratio Calculator
Set your entry price, stop loss, and take profit to see the R:R ratio. Visual bar shows proportion of risk vs reward with dollar amounts and breakeven win rate.
How to evaluate risk/reward
- Enter your entry price, target price and stop-loss price for the trade.
- The calculator computes the risk/reward ratio — the potential profit divided by the potential loss.
- A ratio of at least 2:1 (or 3:1 in most setups) is a reasonable minimum for trend trades.
- Use the position-size suggestion to avoid risking more than a fixed percentage of your portfolio on any one trade.
Common use cases
- Screening trade ideas by ruling out setups with risk/reward under a minimum threshold.
- Sizing positions consistently using a fixed percentage of portfolio at risk per trade.
- Reviewing past trades to see whether winners actually hit their targets or only delivered partial reward.
- Teaching trade discipline by making risk/reward the first filter before any technical analysis.
Frequently asked questions
What is a risk reward ratio?
A risk-to-reward ratio (R:R, also written 'risk/reward' or 'risk to reward') compares how much you stand to lose if your stop-loss is hit against how much you stand to gain if your target is reached. A 1:2 R:R means risking $1 to potentially make $2.
How do you calculate risk-to-reward?
R:R = potential reward / potential risk. Reward = take-profit price − entry price. Risk = entry price − stop-loss price (for longs). Divide reward by risk and you get the ratio. The calculator does this automatically once you enter the three prices.
What is a good risk reward ratio for trading?
Most consistent traders aim for at least 1:2, meaning they want potential reward to be twice the potential risk. Combined with a 40-50% win rate, that R:R produces positive expectancy. Day-traders sometimes accept 1:1.5 with higher win rates; swing traders often demand 1:3 or better.
Is a higher ratio always better?
Higher is better for a fixed win-rate, but extreme ratios (10:1) usually require low hit rates that make the expected value fragile. Most systems balance hit rate and average win.
Where should I set the stop loss?
Below a meaningful support level for long trades, above resistance for shorts. Arbitrary percentage stops (e.g., always 5% below entry) are less effective than structural stops based on the chart.
What position size is safe?
Risking 1-2% of portfolio per trade is a common rule. That way even a string of 10 losses only drawdowns your account 10-20% — recoverable with discipline.
Is my data stored?
No. Calculations run entirely in your browser.
About risk/reward
The risk-to-reward ratio compares potential loss to potential gain. A 1:2 R:R means you risk $1 to potentially make $2. Professional traders aim for at least 1:2.
- Visual R:R ratio bar
- Dollar risk and reward amounts
- Breakeven win rate calculation
- Adjustable position size
- Entry, stop loss, take profit inputs
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