Risk-reward ratio calculator
Enter your entry, stop-loss and target prices and this tool instantly gives you the risk-reward ratio, the dollar risk and reward per unit, and — the number most people forget — the break-even win rate you actually need to make that ratio profitable. Add your win rate to see expectancy per $1 risked. Free, instant, runs entirely in your browser.
Last updated 21 June 2026 · by Mustafa Bilgic
A positive expectancy means the edge is profitable over many trades; a negative one means it loses, no matter how attractive the ratio looks. Leave win rate blank or 0 if you only want the ratio.
What the risk-reward ratio is
The risk-reward ratio (often written R:R, or just "R") compares how much you stand to gain on a trade against how much you stand to lose. For a single trade with a fixed entry, stop and target it is purely a function of those three prices. The risk is the distance from your entry to your stop-loss; the reward is the distance from your entry to your take-profit. Divide reward by risk and you have the ratio. A trade risking $2,000 to make $5,000 has a ratio of 2.5, which we write as 1 : 2.50 — one unit of risk for 2.5 units of potential reward.
The formula
risk-reward ratiorisk = |entry − stop|
reward = |target − entry|
R:R = reward ÷ risk
# Break-even win rate (the % you must win just to not lose)
breakeven% = 100 ÷ (1 + R:R)
# Expectancy, if you supply a win rate w (as a fraction)
expectancy = w × R:R − (1 − w) # per $1 risked
With the default values — entry 42,000, stop 40,000, target 47,000 — risk is 2,000, reward is 5,000, so R:R is 2.5 (shown as 1 : 2.50). The break-even win rate is 100 ÷ 3.5 ≈ 28.6%. At a 50% win rate the expectancy is 0.5 × 2.5 − 0.5 = +0.75 per $1 risked, meaning that over many identical trades you would expect to make about 75 cents for every dollar put at risk, before fees.
Why a great ratio can still lose money
This is the honest part that flashy "always use 1:3" advice leaves out. A high risk-reward ratio is worthless if your win rate is too low. The break-even win rate is the bridge between the two: at a 1:1 ratio you need to win more than 50% of the time, at 1:2 about 34%, at 1:3 about 25%. If your real, tested win rate sits below that line, the strategy bleeds money over time no matter how good the ratio looks on a single trade. That is exactly why this calculator shows the break-even rate next to the ratio — they are meaningless apart.
Expectancy ties them together: win rate × R:R − loss rate. If that is positive you have an edge; if it is negative you do not, full stop. Chasing huge reward targets often lowers your win rate enough to flip expectancy negative. Always test the pair, never the ratio alone.
How it pairs with position sizing
The risk-reward ratio tells you the shape of a trade; position sizing tells you the size. Together they form a complete risk plan. First decide a fixed fraction of your account to risk per trade — commonly 1% — using risk management and position sizing. Then this calculator tells you, for that risk, what reward you are chasing and what win rate you need to justify it. To project the long-run outcome of a ratio at a given win rate, feed both into the win-rate profit calculator, and read win rate vs risk-reward and risk-reward explained for the full picture. The deeper idea — that stop-loss and take-profit placement defines your ratio before you ever enter — is worth internalising: where you put the stop and target is your risk-reward.
Frequently asked questions
How do you calculate the risk-reward ratio?
Risk-reward ratio = reward per unit ÷ risk per unit, where risk = |entry − stop| and reward = |target − entry|. If you risk $2,000 to make $5,000, the ratio is 2.5, written 1 : 2.50. It tells you how many dollars of potential profit you are chasing for each dollar you put at risk.
What is a good risk-reward ratio?
There is no single good number — it depends entirely on your win rate. A 1:2 ratio only needs to win about 34% of the time to break even, while a 1:1 ratio needs over 50%. A higher ratio is not automatically better if it comes with a much lower win rate. Always judge the ratio and the win rate together.
What is the break-even win rate?
The break-even win rate is the percentage of trades you must win, at a given risk-reward ratio, just to avoid losing money before fees. The formula is 100 ÷ (1 + R:R). For a 1:2.5 ratio that is 100 ÷ 3.5 ≈ 28.6%. Win less than that over many trades and you lose money even with a great ratio.
Does a high risk-reward ratio guarantee profit?
No. A great ratio still loses money if your win rate sits below the break-even line. Expectancy combines both: expectancy per $1 risked = win rate × R:R − loss rate. If that number is negative, the strategy loses over time no matter how attractive the ratio looks. Risk-reward must always be paired with a realistic, tested win rate.