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Two-pan balance scale weighing risk against reward

Risk/Reward Ratio Calculator

The risk/reward ratio compares how much you stand to lose to how much you stand to gain on a trade. Enter your entry, stop-loss, and target below to get your ratio, the win rate you need to break even, and a position size that respects your account risk.

Direction
Risk / unit
$5
Reward / unit
$15
Risk : Reward
1 : 3
Breakeven win rate
25%

At a 1:3 risk/reward ratio, you only need to win 25% of your trades to break even (before fees).

Position size
20 units
Capital at risk
$100
Potential reward
$300

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How to calculate risk/reward ratio

The formula is simple:

Risk/reward ratio = reward per unit ÷ risk per unit

  • Risk per unit = the distance from your entry price to your stop-loss.
  • Reward per unit = the distance from your entry price to your target.

Worked example

Say you buy a stock at $100, set a stop-loss at $95, and a target at $115:

  • Risk per share = $100 − $95 = $5
  • Reward per share = $115 − $100 = $15
  • Risk/reward ratio = $15 ÷ $5 = 1:3
  • Breakeven win rate = 5 ÷ (5 + 15) = 25%

A 1:3 ratio means you only need to win one in four trades to break even before fees. That is why position sizing and a consistent ratio matter more than being right every time.

How to use this calculator

  1. Choose direction. Select long or short so the tool validates your stop and target placement.
  2. Enter your entry price. Type the price at which you plan to enter the trade.
  3. Enter your stop-loss. Type the price where you would exit to cap your loss.
  4. Enter your target. Type the price where you would take profit.
  5. Read your results. The tool shows your risk/reward ratio, the win rate you need to break even, and your position size based on your account risk.

Frequently asked questions

What is a good risk/reward ratio?

Many traders look for at least 1:2, meaning the potential reward is twice the amount risked. A higher ratio lets you stay profitable with a lower win rate, but no single ratio is "correct"; it depends on your strategy and how often your setups actually reach the target.

How do you calculate the risk/reward ratio?

Risk/reward ratio = potential reward per unit divided by potential risk per unit. Risk per unit is the distance from your entry to your stop-loss. Reward per unit is the distance from your entry to your target. For example, risking $5 to make $15 is a 1:3 ratio.

What win rate do I need to break even?

Your breakeven win rate is risk divided by the sum of risk and reward. At 1:2 you need to win about 33.3% of trades to break even; at 1:3, about 25%. The calculator shows this automatically as you change your prices.

How is position size calculated?

Position size = the dollar amount you are willing to risk divided by your risk per unit. If you risk 1% of a $10,000 account ($100) and your stop is $5 away from entry, your position size is 20 units. This keeps each trade within your risk budget.

Is this risk/reward calculator free?

Yes. The calculator is completely free, runs in your browser, and requires no signup. Nothing you enter leaves your device.

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Educational only. Not financial advice. NFA. Bullynx is not a registered investment adviser or broker-dealer. Trading and investing involve significant risk of loss. Read the full risk disclosure.