See what a trade stands to make against what it can lose, and how often a setup like it has to work before it pays.
Reward to risk
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Win rate to break even
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Risk per share
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Reward per share
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Total risk
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Total reward
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Where the stop and target sit
How it works
The ratio compares the distance to your target with the distance to your stop. A 3 to 1 trade makes three dollars for every dollar it can lose.
The break even win rate shows why the ratio matters: at 3 to 1 you only need to be right one time in four to come out even before costs, while at 1 to 1 you need to be right half the time.
The formula
Risk = |Entry − Stop|
Reward = |Target − Entry|
Reward to risk = Reward ÷ Risk
Break even win rate = 1 ÷ (1 + Reward to risk)
Worked example
Buying at $100 with a stop at $95 and a target at $115 risks $5 to make $15, a 3 to 1 trade. The break even win rate is 1 ÷ (1 + 3) = 25%. With 100 shares that is $500 at risk against $1,500 of reward.
Risk to Reward questions
What is a good risk to reward ratio?
Many traders look for at least 2 to 1. A lower ratio can still work, but only with a higher win rate, so the two numbers should always be judged together.
Does a higher ratio always mean a better trade?
No. A far away target is reached less often. The ratio is only useful next to an honest estimate of how often the trade gets there.
Does it work for short trades?
Yes. Put the stop above the entry and the target below it; the calculator reads the direction from the prices.
For informational and educational purposes only. Not investment advice, and not a recommendation to buy or sell any security. Results are estimates from the numbers you enter.