Risk/Reward Ratio Calculator
Turn entry, stop, and target into your R:R ratio, risk/reward per share, and the win rate needed to break even.
Trade plan
Fees and commissions are intentionally excluded — the ratio is a planning metric. Ticker is a label only; no market data is fetched.
How it works
Every trade plan has three prices: where you get in (entry), where you admit you were wrong (stop), and where you take profit (target). The distance from entry to stop is your risk per share; the distance from entry to target is your reward per share. Dividing reward by risk gives the risk/reward ratio — how many dollars the plan targets for every dollar it puts at risk.
The ratio alone is only half the story, so this calculator also shows the break-even win rate: the fraction of trades that must be winners for a system with this exact R:R to average out to zero. A 3.00 : 1 plan breaks even at a 25% win rate; a 1.00 : 1 plan needs 50%. Add an optional share count and you also get the total dollars at risk and the total dollar reward.
Short trades are fully supported: a short loses as price rises to the stop and profits as price falls to the target, so the risk and reward legs flip sides — the ratio and break-even math are then identical.
The formula
- Risk per share — long: entry − stop; short: stop − entry. Dollars lost per share if the stop is hit.
- Reward per share — long: target − entry; short: entry − target. Dollars gained per share if the target is hit.
- Risk/reward ratio— reward per share ÷ risk per share. A ratio of 3 means the plan targets $3 of reward for every $1 risked, displayed as “3.00 : 1”.
- Break-even win rate — 1 ÷ (1 + R:R), expressed as a percent. Equivalently: risk per share ÷ (risk per share + reward per share). It comes from setting the expected value per trade — win rate × reward − (1 − win rate) × risk — to zero and solving for the win rate.
- Dollar risk / dollar reward — risk per share × shares and reward per share × shares, shown only when a share count is provided.
Worked example
A long trade in NVDA (ticker is a label only): entry $130.00, stop $122.00, target $154.00, 50 shares.
- Risk per share = 130.00 − 122.00 = $8.00.
- Reward per share = 154.00 − 130.00 = $24.00.
- Risk/reward ratio = 24.00 ÷ 8.00 = 3.00 : 1.
- Break-even win rate = 1 ÷ (1 + 3.00) = 0.25 → 25.00%. Identity check: 8.00 ÷ (8.00 + 24.00) = 0.25 ✓.
- Sanity check: at a 25% win rate, expected value per trade = 0.25 × 24.00 − 0.75 × 8.00 = 6.00 − 6.00 = $0.00 — exactly break-even.
- Dollar risk = 8.00 × 50 = $400.00.
- Dollar reward = 24.00 × 50 = $1,200.00.
Short trade example: entry $40.00, stop $44.00, target $30.00, 200 shares. Risk per share = 44.00 − 40.00 = $4.00; reward per share = 40.00 − 30.00 = $10.00; ratio = 10.00 ÷ 4.00 = 2.50 : 1; break-even win rate = 1 ÷ 3.50 ≈ 28.57%; dollar risk = $800.00; dollar reward = $2,000.00.
Frequently asked questions
How do I calculate the risk/reward ratio of a trade?
Divide the reward per share (distance from entry to target) by the risk per share (distance from entry to stop). A long trade entered at $130 with a $122 stop and $154 target risks $8 to make $24 — a 3.00 : 1 risk/reward ratio.
What win rate do I need to break even at a given risk/reward ratio?
The break-even win rate is 1 ÷ (1 + R:R). At 2:1 you need to win 33.33% of trades to break even; at 3:1, 25%; at 1:1, 50%. This ignores fees and slippage, which raise the real threshold slightly.
What is considered a good risk/reward ratio?
There is no universal number — a ratio is only meaningful alongside a win rate. Many traders look for at least 2:1 so that a sub-50% win rate can still be profitable, but a 1:1 system with a high win rate can outperform a 4:1 system whose targets rarely get hit.
Does this calculator work for short trades?
Yes. For a short, risk per share is the stop minus the entry (a short loses as price rises) and reward per share is the entry minus the target (a short profits as price falls). The ratio and break-even win rate formulas are then identical.
Does a high risk/reward ratio guarantee a profitable trade?
No. The ratio describes one trade's planned payoff shape, not its probability of success. Long-run results depend on the combination of ratio and actual win rate — which is why this tool shows the break-even win rate alongside the ratio.
Is the risk/reward ratio the same thing as an R-multiple?
They're related. Risk per share (entry minus stop) defines 1R. The planned risk/reward ratio is your target expressed in R before the trade; an R-multiple usually describes the realized result afterward — a trade that made twice its risk closed at +2R.
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Educational disclaimer
Educational planning tool only — not a recommendation to enter any trade (US markets). Outputs assume the stop and target fill exactly at their prices; real results vary with gaps, slippage, spreads, commissions, and (for shorts) borrow costs, none of which are modeled here. The break-even win rate is a mathematical threshold for the entered R:R, not a prediction that any win rate is achievable.