Risk/Reward Ratio Calculator
Enter an entry, stop-loss, and target to get the reward-to-risk ratio those three prices imply, each distance as a percentage of the entry, and the breakeven win rate that follows from the ratio. Computed from your inputs alone — no market data is used and none is shown.
Trade levels
Price per share at entry
Exit price. Below entry is a long, above entry is a short
Exit price on the winning side of the entry
Share count, to convert the per-share figures into dollars
Formula
risk = | entry − stop |
reward = | target − entry |
R = reward ÷ risk
breakeven win rate = 1 ÷ (1 + R)
Risk / reward
Risking $5.00 per share to make $15.00 per share.
- Risk per share
- $5.005.00% of entry
- Reward per share
- $15.0015.00% of entry
- Breakeven win rate
- 25.00%1 ÷ (1 + R), before costs
The breakeven win rate is the value of w that solves w × reward = (1 − w) × risk: the win percentage at which gains and losses cancel exactly over many trades of this shape. It is arithmetic about the levels entered, not an estimate of how often this trade would reach the target. Commissions, slippage, and partial fills are not included and would raise the win rate required.
How the calculation works
The risk/reward ratio compares the distance from your entry down to your stop against the distance from your entry up to your target. It is four pieces of arithmetic over three prices:
- Risk = | entry price − stop-loss price |
- Reward = | target price − entry price |
- R = reward ÷ risk
- Breakeven win rate = 1 ÷ (1 + R)
Worked through with the default inputs: an entry of $100, a stop at $95, and a target of $115 give $5 of risk and $15 of reward, so R = 3 and the ratio displays as 1 : 3. The breakeven win rate is 1 ÷ (1 + 3) = 0.25, or 25%. Reversed as a short — entry $100, stop $105, target $85 — the same $5 and $15 distances give the same 1 : 3 and the same 25%.
The breakeven figure follows from setting the two sides equal. Over n trades at win rate w, total gains are w × n × reward and total losses are (1 − w) × n × risk. Setting those equal and dividing through by n × risk gives w × R = 1 − w, so w = 1 ÷ (1 + R).
What this does not tell you is how likely the target is. R is determined entirely by where you place the stop and target, so it can be raised to any value by moving the target further away — which also makes reaching it less likely. The calculator reports the ratio and the win rate that ratio implies; it does not estimate the probability of either outcome, and the breakeven figure ignores commissions and slippage.
Frequently asked questions
How is the risk/reward ratio calculated?+
Risk is the distance from your entry price to your stop-loss. Reward is the distance from your entry to your target. The ratio is reward divided by risk, shown as 1 : X. For example, an entry of $100, stop of $95, and target of $115 gives $5 of risk and $15 of reward, a 1 : 3 ratio.
How does the ratio relate to the win rate?+
They trade off against each other through one equation. A 1 : 1 ratio breaks even at a 50% win rate, 1 : 2 at 33.3%, 1 : 3 at 25%, and 1 : 4 at 20%. Raising the ratio lowers the breakeven win rate, but the ratio is a property of the levels you chose, not evidence that the target will be reached — moving the target further away raises the ratio and lowers the chance of getting there. This calculator does not estimate that chance and does not suggest a ratio to aim for.
What is the breakeven win rate?+
It is the win percentage w that solves w × reward = (1 − w) × risk, which rearranges to w = 1 ÷ (1 + R). At that win rate, wins and losses cancel exactly over a long series of trades of the same shape. It is arithmetic about the numbers entered, not a forecast, and it excludes commissions and slippage, which raise the win rate actually required.
Does it work for short trades?+
Yes. A stop-loss above the entry is read as a short and the target must then be below the entry. A stop below the entry is a long and the target must be above it. If the target is on the losing side of the entry the calculator says so instead of returning a ratio, because taking the absolute distance would otherwise report a loss as a reward.
Do I have to enter a position size?+
No. Position size is optional. Leave it blank to see per-share and percentage figures only, or enter a share count to also see the total dollar risk and dollar reward for that many shares.
Related tools
Position Size Calculator
Find how many shares to buy based on your risk per trade.
Kelly Criterion Calculator
Turn your win rate and win/loss ratio into an edge-optimal stake.
Options Calculator
Price options and analyze the Greeks with Black-Scholes.
Backtesting Engine
Test your strategy against historical market data.
All Trading Tools
Browse every free tool on QuantEngines.
This calculator performs and displays arithmetic on the inputs you provide. It is not investment advice, does not recommend a ratio, a target, or any trade, and makes no claim about the likelihood of any outcome.