Risk Reward Calculator
Measure downside, upside, and trade quality before you enter. Calculate risk per unit, reward per unit, break-even win rate, and optional total trade risk in one clean workflow.
Trade Inputs
Fill in your setup details. Results update instantly.
Results
Use these numbers before the trade is entered.
Plan the Trade Before You Take It
Use the calculator to compare downside and upside before entering. Clean risk-reward planning helps you filter weaker setups, structure better trades, and avoid taking ideas that look attractive only after the fact.
How to Use This Risk Reward Calculator
Choose trade direction
Select whether the setup is long or short, then enter your planned entry, stop loss, and target.
Measure the setup
The calculator compares downside and upside distance so you can see the trade’s reward relative to risk before entry.
Review quality before execution
Check the ratio, break-even win rate, and optional total risk or reward before deciding whether the trade is worth taking.
This calculator works best when you already have a defined entry, stop loss, and target. Once those levels are clear, trade quality becomes much easier to compare objectively.
What This Risk Reward Calculator Shows You
Risk per Unit
How much price can move against you before the stop loss is hit.
Reward per Unit
How much price can move in your favor before the target is reached.
Risk / Reward Ratio
The core comparison metric for deciding whether a setup offers enough upside relative to downside.
Break-Even Win Rate
The approximate win rate needed to break even over time at that ratio before broader strategy effects.
Total Trade Risk
If you add position size, the calculator estimates how much you stand to lose on the full position.
Total Potential Reward
If you add position size, the calculator also estimates the full upside available if the target is reached.
If you also want to calculate exactly how large your trade should be, pair this tool with our Position Size Calculator.
Quick Risk Reward Reference Table
These are common reward-to-risk relationships traders use when evaluating setups.
| Risk / Reward | What It Means | Approx. Break-Even Win Rate |
|---|---|---|
| 1:1 | You risk 1 unit to make 1 unit | 50.00% |
| 1:1.5 | You risk 1 unit to make 1.5 units | 40.00% |
| 1:2 | You risk 1 unit to make 2 units | 33.33% |
| 1:3 | You risk 1 unit to make 3 units | 25.00% |
| 1:4 | You risk 1 unit to make 4 units | 20.00% |
Lower break-even win rates can look attractive, but only if the target and stop loss are realistic. A mathematically strong ratio still needs a technically valid setup.
Risk Reward Formula
The basic formula is:
Risk-Reward Ratio = Trade Risk ÷ Trade Reward
Trade risk is the distance between your entry and stop loss. Trade reward is the distance between your entry and target.
If a setup risks $5 per share to potentially make $10 per share, it has a 1:2 risk-reward ratio. That does not guarantee a good trade, but it gives you a cleaner way to compare quality before execution.
Example Risk Reward Calculation
Suppose you plan a long trade with an entry at $100, a stop loss at $95, and a target at $110.
Your risk per unit is $5. Your reward per unit is $10. That gives you a 1:2 risk-reward ratio.
If you take 20 shares, your total trade risk is $100 and your total potential reward is $200 before costs.
Risk Reward Habits That Help
Good Habits
- Define entry, stop, and target before the trade
- Use ratios to filter weaker setups early
- Check whether the target is technically realistic
- Pair risk-reward with proper position sizing
- Use the ratio as a decision aid, not as the whole strategy
Common Mistakes
- Choosing unrealistic targets just to improve the ratio
- Placing stop losses too tight without technical reasoning
- Ignoring fees and slippage completely
- Using risk-reward in isolation without considering probability
- Confusing a good ratio with a guaranteed profitable trade
A strong risk-reward ratio is useful, but it should support a valid setup, not replace one.
Risk Reward Calculator FAQ
What is a risk reward calculator?
A risk reward calculator helps traders compare the downside of a trade to its potential upside based on entry, stop loss, and target price.
What is a good risk-reward ratio?
Many traders prefer setups around 1:2 or better, but there is no universal ideal ratio. The right number depends on your strategy, win rate, market, and execution quality.
Can I use this calculator for stocks, crypto, and forex?
Yes. This calculator works for most price-based markets where you can define an entry, stop loss, and target.
What does break-even win rate mean?
It is the approximate win rate needed to avoid losing money over time at a given risk-reward ratio before broader costs and strategy factors.
Should I use this with a position size calculator?
Yes. Risk-reward helps judge whether the setup is attractive, while a position size calculator helps determine how large the trade should be based on account risk.
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Financial Disclaimer
The content on ChartWiseHub.com is provided for educational purposes only and does not constitute financial or investment advice. Trading and investing involve risk, and you should never invest money you cannot afford to lose. Always do your own research or consult with a licensed financial advisor before making financial decisions.