Risk/Reward Calculator
Three prices give you the ratio. The more useful number sits next to it: the win rate that ratio needs before the winners cover the losers at all.
Risk / reward
risk to reward, per unit
Risk per unit
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Reward per unit
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Break-even win rate
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This is a calculator, not advice. It works only on the numbers you type in — it has no market data and no opinion on what you are trading. Nothing here is a recommendation to open, close or size a position, and technical analysis describes probabilities rather than outcomes. Expectancy is arithmetic on a win rate you supply, not a forecast of anything.
Where the target comes from
A ratio is only as good as the two levels behind it, and those come off the chart rather than out of a form. Chart AI reads a photo of any chart and describes the trend, the support and resistance on it, the volatility and the volume — the things a stop and a target get placed against.
The ratio is only half a number
Risk/reward compares two distances: entry to stop, and entry to target. A stop 5 below and a target 15 above is 1:3 — you are putting up one unit to try to make three. It is easy to calculate and, taken alone, it says almost nothing, because nothing in it accounts for how often the target is actually reached before the stop.
The number that fixes this is the break-even win rate, and it comes straight out of the same two distances: risk ÷ (risk + reward). It is the share of trades that has to work for the winners to exactly pay for the losers. Above that line the arithmetic is in your favour, below it no amount of discipline helps.
| Risk/reward | Break-even win rate | Losers each winner covers |
|---|---|---|
| 1 : 0.5 | 66.7% | 0.5 |
| 1 : 1 | 50.0% | 1 |
| 1 : 1.5 | 40.0% | 1.5 |
| 1 : 2 | 33.3% | 2 |
| 1 : 3 | 25.0% | 3 |
| 1 : 5 | 16.7% | 5 |
Expectancy, and why the slider matters
Move the win rate slider and the panel works out the expectancy: the average result per trade in R, where 1R is the money between your entry and your stop. At a 1:3 ratio and a 40% win rate that is 0.4 × 3 − 0.6 × 1 = +0.6R per trade on average. The figure is an average over many trades, not a prediction about the next one, and it is only as good as the win rate you typed in — which is why the honest version of this exercise uses a win rate counted off your own closed trades rather than one that makes the number come out nicely.
The direction the two numbers pull is the useful part. Stretching the target improves the ratio and lowers the break-even win rate, but distant targets are reached less often, so the real win rate falls too. Tightening the stop does the same thing from the other end, at the cost of being stopped out by noise more often. There is no setting where both improve, and most of what looks like strategy is picking a point on that trade-off.
What the ratio does not capture
It assumes both exits happen at the prices you typed. In practice, targets get filled partially, stops slip, gaps skip over levels entirely, and a position closed by hand halfway to the target has a different ratio from the one planned. It also treats every trade as independent, which they are not if you hold several correlated positions at once — three long positions in the same sector are closer to one trade at triple size than to three separate ones.
Questions
What is a good risk/reward ratio?
The question has no answer without a win rate, which is why this page shows both. A 1:3 ratio is worthless to someone right 20% of the time, and 1:0.5 is workable for someone right 80% of the time. The only thing the ratio tells you on its own is the break-even win rate — the share of trades that has to work out for the winners to exactly cover the losers. Whether your actual win rate clears that line is a question about your record, not about the ratio.
How do I know my win rate?
By counting. Take your last hundred or so closed trades and divide the winners by the total. Fewer than about thirty and the number moves around too much to lean on, and a win rate you have estimated rather than measured is a guess dressed as a statistic — which matters here, because the expectancy figure on this page flips sign on a few percentage points either side of break-even.
Why is my expectancy negative with a 1:3 ratio?
Because the win rate you set is below 25%. At 1:3 each winner covers three losers, so you need to win one trade in four just to stand still. Set the slider to 26% and the number turns positive; set it to 24% and it does not. This is the whole reason the ratio alone is not enough to judge a setup.
What is R?
One R is one unit of risk — the distance from your entry to your stop, in money. A trade that hits a 1:3 target returns 3R; one that is stopped out loses 1R. Expressing everything in R is what lets you compare a share trade against a currency pair against a futures contract, because it strips out the price and the position size and leaves only the shape of the trade.
Does it include fees, spread or slippage?
No. All three quietly worsen the real ratio: you pay the spread on entry and exit, commission on both, and your stop fill is usually a little past your stop price. On a wide target the effect is a rounding error; on a scalp with a target a few ticks away, costs can be a larger share of the reward than anything the chart is doing.
