Risk Reward Ratio Calculator
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Frequently Asked Questions
How do you calculate risk to reward ratio?
Risk to reward ratio equals the distance from entry to stop loss divided into the distance from entry to profit target. If you buy a stock at $100 with a stop at $95 and a target of $115, your risk is $5 and your reward is $15, giving a 1:3 risk to reward ratio. You risk $1 to make $3 on the trade.
What is a good risk to reward ratio for trading?
Most professional traders target at least 1:2 or 1:3 risk to reward. With a 1:2 ratio, you only need to win 33.3% of your trades to break even. At 1:3, you only need to win 25%. Higher ratios give you more room for error on win rate but are harder to find in high-probability setups.
How does position size relate to risk reward?
Position size is derived from your risk per trade divided by your stop distance. If you risk 1% of a $100,000 account ($1,000) on a trade with a $2 stop, your position size is 500 shares. The ratio itself does not change that share count; it tells you what the 500 shares can make. Enter your account size and risk percentage in the calculator above and it does this arithmetic for you, returning the share count, the dollar amount at risk, the dollar reward, and the total position cost.
What does a 1:3 risk reward ratio mean?
A 1:3 risk to reward ratio means you are risking 1 unit to make 3 units. If your stop loss is $2 below entry, your profit target is $6 above entry. Over a large sample size, a trader with a 1:3 ratio only needs to win 25% of the time to break even and anything above that is profit.
How do I use risk reward to set stop loss and profit target?
Start by identifying a logical stop based on the chart (below support, above a swing high, below a moving average). Then multiply the stop distance by your minimum R multiple (typically 2 or 3) to find your profit target. If the resulting target is not reachable based on price structure, skip the trade. Let the chart define the stop, then size the target from the ratio.
How to Use This Risk Reward Ratio Calculator
This free risk reward ratio calculator helps traders evaluate the potential return of a trade against its risk, then size the position to match. Enter your entry price, profit target, and stop loss. Add your account size and the percentage of it you are willing to risk on one trade, and optionally your estimated win rate, to unlock position sizing and expectancy. Click Calculate.
The top of the results gives you the risk/reward ratio, the trade direction it inferred from your prices, the breakeven win rate, and your risk and reward per share. Entering an entry price of $10, a profit target of $15, and a stop loss at $9 gives a ratio of 1:5. You are risking $1 to make $5, and you only need to win 16.67% of the time to break even.
Fill in the account size and risk per trade and a Position Sizing panel appears with the number of shares to buy, your dollar risk, your dollar reward, and what the position costs. Risking 1% of a $25,000 account on that same trade means $250 at risk, 250 shares, and $1,250 of reward on a $2,500 position.
Add an estimated win rate and an Expectancy panel appears on top of that, showing your expected profit per trade and your expected return per $1 risked, plus a plain-language note on whether your win rate clears the breakeven threshold for this setup. A good ratio with a win rate below breakeven is still a losing strategy, and this is where that shows up.
Below the results, the chart plots the Breakeven Win Rate curve across reward-to-risk ratios, shades the Losing Zone beneath it, and marks Your Setup so you can see at a glance whether the trade sits on the profitable side of the line.
This calculator is ideal for day traders, swing traders, or anyone who wants to assess trade setups with a risk-first mindset.
You can check out the rest of our calculators here!
Find Out Your Real Win Rate
Financial Tech Wiz Trading Journal
Expectancy is only as good as the win rate you feed it, and most traders guess high. The journal logs every entry and exit and gives you the actual number, along with P&L broken down by symbol and hold duration, so the next setup you run through this calculator starts from a figure you can trust.
Measure Your EdgeRelated Free Calculators
Once the setup passes, check what the exit actually nets after fees with the stock profit calculator, or model a defined-risk options version of the same trade in the options profit calculator. If a position moves against you and you are weighing an add, the average down calculator shows what it does to your cost basis. To start logging the trades you size here, grab the free trading journal template.