Risk / Reward Ratio Calculator
Turn an entry, stop-loss and target into a risk/reward ratio and the win rate you need to break even on the trade.
How it works
Risk = |entry − stop| · Reward = |target − entry| · Ratio = reward ÷ risk · Break-even win rate = risk ÷ (risk + reward)
The risk/reward ratio compares how much you stand to lose if your stop is hit against how much you stand to gain at your target. A higher ratio means each winning trade pays for more losers, which lowers the win rate you need just to break even. A 1:3 trade, for instance, breaks even at only a 25% win rate — which is why professionals prize the ratio as much as the hit rate itself.
Worked example
Enter at $100 with a $95 stop and a $115 target: risk is $5, reward is $15, a 1:3 ratio. Break-even win rate is 5 ÷ (5 + 15) = 25%, so winning just one trade in four keeps you flat before fees.
Frequently asked questions
What is a good risk/reward ratio?
Many traders look for at least 1:2 — twice the reward for the risk taken. Higher ratios tolerate lower win rates, but targets that are too ambitious may rarely be reached, so the ratio must be judged alongside how often the target actually hits.
How does the break-even win rate work?
It is the fraction of trades you must win to cover the losers at a given ratio: risk ÷ (risk + reward). At 1:1 you need 50%; at 1:3 only 25%. A strategy is profitable when its real win rate clears this threshold, after costs.
Does a great ratio guarantee profit?
No. A wide target lifts the ratio but may seldom be reached, dragging down your actual win rate. The two must be weighed together — an appealing ratio you rarely achieve can still lose money.
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Educational estimate, not investment advice. Markets involve risk of loss.