Risk/Reward Ratio Calculator
The reward-to-risk ratio compares what a trade stands to make against what it stands to lose. The number most people skip is its consequence: every R:R implies a minimum win rate just to break even. A 1:3 trade only needs to work one time in four; a 1:1 trade needs to work more than half the time. This calculator shows both at once.
- • Risk = |entry − stop|. Reward = |target − entry|.
- • Reward : risk = reward ÷ risk (shown as 1 : R).
- • Break-even win rate = risk ÷ (risk + reward) = 1 ÷ (1 + R). Win less often than this and you lose money even with a good ratio.
Worked example: risking $5 to make $15 is a 1 : 3 ratio, so you only need to be right 5 ÷ 20 = 25% of the time to break even.
A great ratio is worthless if the setup rarely reaches its target, and costs push the required win rate higher. Educational tool, not advice.
A calculator shows what a rule should do on paper. Whether a strategy actually beats simply buying and holding — costs on, losses shown, no hindsight — is a different question, and the only one that pays. Test one on real data, free, no sign-up.