Risk Reward Calculator

A risk reward calculator computes the ratio of your potential loss to your potential gain on a trade. You enter your entry price, stop-loss price and take-profit target; the calculator divides the potential reward by the potential risk and displays the result as “1 : X” — meaning you risk 1 unit to potentially gain X units. It also shows the breakeven win rate (the minimum percentage of trades you need to win to stay profitable at this ratio) and, optionally, your expected P&L per trade.

Risk per unit = |entry price − stop-loss price|. Reward per unit = |take-profit price − entry price|. The ratio is reward ÷ risk, normalized and displayed as “1 : X”. For example, if you enter a trade at $100, set your stop at $95 and your target at $115, risk = $5, reward = $15, and the ratio is 1 : 3.

A commonly cited minimum is 1 : 2 — you aim to gain at least $2 for every $1 you risk. At 1 : 2, you only need to win 33.3% of trades to break even. Many systematic traders aim for 1 : 3 or better (25% breakeven win rate), so that even a modest win rate generates consistent profit. The right ratio depends on your strategy’s actual win rate: a high-win-rate scalping strategy can be profitable at 1 : 1, while a trend-following system with rare wins may require 1 : 5 or more.

Breakeven win rate = risk ÷ (risk + reward) = 1 ÷ (1 + RR), expressed as a percentage. If your ratio is 1 : 3, the breakeven win rate is 1 ÷ (1 + 3) = 25%. If your historical win rate is above 25%, you are profitable at this ratio; below 25%, you lose money on net even though individual winners outperform individual losers.

Both express the same relationship between potential loss and potential gain, but swap the order. “Risk:reward 1:3” means you risk 1 to gain 3. “Reward:risk 3:1” (or “reward-to-risk ratio 3”) also means you gain 3 per 1 risked. The underlying multiple (reward divided by risk) is identical. This calculator normalizes to “1 : X” (risk side first) and also displays the bare reward/risk multiple so you can read it either way.

Enter your entry price, stop-loss level and take-profit level in the currency pair’s price (e.g. EUR/USD at 1.1000, stop 1.0950, target 1.1150). The calculator shows risk = 50 pips, reward = 150 pips, ratio 1 : 3 and breakeven win rate 25%. Enter your position size in units (e.g. 100,000 for a standard lot) to see total risk and reward in currency terms.

Trading expectancy is the average profit or loss you can expect per trade, given your win probability and risk:reward ratio. Formula: Expectancy = (win probability × average win) − (loss probability × average loss). If your ratio is 1 : 3, your average win is $300, average loss is $100, and you estimate a 40% win rate: expectancy = (0.40 × $300) − (0.60 × $100) = $60 per trade. A positive expectancy means the strategy is theoretically profitable over many trades.

Yes. The risk:reward calculation works identically for any liquid instrument where price moves translate linearly to profit and loss per unit — stocks, ETFs, cryptocurrency, spot forex, and commodity spot prices. For futures, CFDs and options, you may need to adjust for the contract’s point/tick value to convert price distances into currency P&L; the calculator’s quantity field handles this when you set quantity to reflect the notional value per price unit.

If stop equals entry, the risk per unit is zero, and the ratio is mathematically undefined (division by zero). This calculator flags the input as an invalid setup and refuses to display a ratio. A stop-loss at exactly your entry price means you have no risk limit — which is not a valid trade plan.

No. The ratio only describes the size relationship between potential gain and potential loss on a single trade. Whether a strategy is profitable overall depends on your actual win rate, not just the ratio. A 1 : 10 ratio sounds excellent but is worthless if you win fewer than 9% of trades. Always combine the ratio analysis with realistic expectancy based on your backtest or live win rate.

For a short (sell) trade, price moves in the opposite direction. Risk = stop-loss price − entry price (stop is above entry); reward = entry price − target price (target is below entry). The formula |entry − stop| and |target − entry| handles both directions identically with absolute differences. For example, short at $100, stop $105, target $80: risk = $5, reward = $20, ratio 1 : 4.

Position sizing and risk:reward work together. Once you know the risk per unit (|entry − stop|), you set your position size so that the total risk (risk per unit × quantity) equals the dollar amount you are willing to lose on the trade, typically a fixed percentage of your account (the 1% or 2% rule). This calculator shows total risk = risk per unit × quantity, so you can back-calculate the quantity from your account size and risk tolerance.