Risk Reward Ratio Calculator
The risk reward ratio compares what a trade loses if the stop is hit with what it makes at the target. Divide the distance from entry to target by the distance from entry to stop. Risk 1.50 a share to make 3.00 and the ratio is 1 : 2, a 2R trade that has to win 33.3% of the time to break even.
Pick long or short and enter your entry, stop, and target. You get the risk and reward per share or unit, the ratio as 1 : X and as an R-multiple, and the win rate that ratio needs to break even. Add a second target or your dollar risk to see those too. It is arithmetic on the numbers you type, so it never sees your chart or your account.
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Risk Reward Ratio Calculator
Risk, reward, and the ratio between them, long or short
Enter your entry, stop, and target to see the ratio.
The formula
How the risk reward ratio is calculated
Risk per unit = |Entry - Stop|
Reward per unit = |Target - Entry|
R = Reward ÷ Risk, written 1 : R
Breakeven win rate = 1 ÷ (1 + R)
Direction only decides which side each level sits on. On a long the stop is below the entry and the target above it; on a short both flip. The distances work the same either way, which is why the calculator checks the order first and then measures each gap. A ratio of 1 : 2 and a 2R trade say the same thing: the target pays twice what the stop costs.
Not every source writes it the same way round. The CMC Markets risk/reward guide writes 50 pips of risk against 100 pips of reward as 1:2, the convention used here. The moomoo risk/reward explainer divides risk by reward instead, which gives 0.5 for the same trade. Both describe one trade. Pick one convention and keep it across your journal.
Worked examples, long and short
| Line | Long stock | Short EUR/USD |
|---|---|---|
| Entry | 50.00 | 1.08450 |
| Stop | 48.50 | 1.08700 |
| Target | 53.00 | 1.08075 |
| Second target | 54.50 | Not set |
| Risk per unit | 1.50 | 0.00250 |
| Reward per unit | 3.00 | 0.00375 |
| Risk:reward | 1 : 2 | 1 : 1.5 |
| R-multiple | 2R | 1.5R |
| Breakeven win rate | 33.3% | 40.0% |
| Risk:reward to second target | 1 : 3 | Not set |
| Sizing | 100 shares | $200 at risk |
| Dollar risk | $150 | $200 |
| Dollar reward at target | $300 | $300 |
On the long, 100 shares turns 1.50 of risk per share into $150 at risk, the first target pays $300, and the second target at 54.50 is 4.50 away, a 1 : 3 trade. On the short, entering $200 of risk is enough: the dollar reward is that risk times the ratio, $200 × 1.5 = $300, whatever a pip is worth on your lot size.
Ratio and win rate
How the ratio sets the win rate you need
A bigger ratio lowers the bar. At 1 : 1 you have to win half your trades just to stay flat. At 1 : 3 one winner covers three losers, so a 25% win rate breaks even. That does not make a far target better by default: a target further away gets hit less often, so the real question is whether your win rate at that distance clears the bar. The breakeven win rate calculator adds expectancy at your own win rate, and the risk reward ratio guide for day trading works through what a good ratio looks like in practice.
| Risk:reward | Win pays | Breakeven win rate | Losses one win covers |
|---|---|---|---|
| 1 : 1 | 1R | 50.0% | 1 |
| 1 : 1.5 | 1.5R | 40.0% | 1.5 |
| 1 : 2 | 2R | 33.3% | 2 |
| 1 : 3 | 3R | 25.0% | 3 |
The pure-math floor, before commissions, spread, or slippage. Real breakeven sits a little higher.
The ratio is only half of an edge. The other half is how often the setup actually pays, which is what a trading edge comes down to: win rate and ratio together, over enough trades to mean something.
Common mistakes
How traders fool themselves with the ratio
- Moving the stop closer to make the ratio look better. The stop belongs where the setup is proven wrong, usually past the last swing low on a long. Pull it in to turn 1 : 1.5 into 1 : 3 and mostly what you buy is a better chance of getting stopped out.
- Putting the target past obvious resistance. If a prior high or a round number sits between your entry and your target, price has to get through it first. Measure the ratio to the level price can realistically reach, not the one that makes the math work.
- Measuring from the price you wanted instead of the price you got. If a breakout fills 20 cents above your planned entry, the risk is wider and the reward is shorter. Rerun it with the fill.
- Ignoring the spread and commissions. A 1-pip spread on a 10-pip stop is a tenth of your risk, so the ratio you actually trade sits below the one on paper.
- Quoting the second target's ratio for the whole trade. If half the position comes off at the first target, the trade's ratio is a blend of the two targets, not the bigger number.
Where the stop and targets go is a chart question, not a math one. See stop loss placement based on the chart, how to find support and resistance levels before you pick a target, and scaling out with T1 and T2 for the blended ratio. Once the ratio is worth taking, turn your stop into a share count with the position size calculator.
Grade the setup before you size it
This calculator believes whatever entry, stop, and target you type. It can't tell whether that stop sits past real structure or that target runs into resistance. Upload a chart screenshot and SnapPChart grades the setup A+ to F in seconds. A paid grade also returns an entry, a stop, targets, and the risk:reward between them when the chart supports a trade plan.
Upload a Chart ScreenshotYour first grade is free and shows the setup's grade and the general read. Entry, stop, targets and the trade plan come with a paid plan.
Keep going
Related free tools and guides
- GuideIs my risk reward ratio actually good?The breakeven win-rate math for day trading, what counts as a good ratio, and the mistake of faking 2:1 by dragging the target in.
- Free toolPosition Size CalculatorFree position size calculator: enter account size, risk percent, entry, and stop loss to get your share size instantly. No signup, no AI, pure risk math.
- Free toolBreakeven Win Rate CalculatorFree breakeven win rate calculator: enter your reward:risk ratio (or entry, stop, target) to see the minimum win rate to break even, plus expectancy.
- Free toolFutures Position Size CalculatorFree futures position size calculator: pick ES, NQ, MES, MNQ, CL or GC, enter your risk and stop, and get the contract count with tick and point values.
- Free toolProp Firm Drawdown CalculatorFree prop firm drawdown calculator: enter your balance, peak, and max loss limit to see your liquidation level, buffer left, and losses until you fail.
FAQ
Risk reward ratio questions
How do you calculate the risk reward ratio?
Subtract the stop from the entry to get the risk, and the entry from the target to get the reward (on a short, flip both). Then divide reward by risk. Entry 50.00, stop 48.50, target 53.00: risk 1.50, reward 3.00, and 3.00 ÷ 1.50 = 2, written 1 : 2.
What is a good risk reward ratio?
One your win rate can carry. 1 : 2 is a common floor because it only has to win 33.3% of the time to break even, but a 1 : 1.5 setup that wins 55% of the time (+0.375R per trade) beats a 1 : 3 setup that wins 20% (-0.2R per trade). The ratio sets the bar; your record at that kind of target decides whether you clear it.
Is it risk:reward or reward:risk?
Same trade, two spellings. Written risk first as 1 : 2, the second number is the reward per unit of risk. Some guides divide risk by reward instead and get 0.5 for the same trade, where a lower number is better. This calculator shows 1 : X and the R-multiple X, so a bigger number always means more reward for the risk.
What is an R-multiple?
Reward measured in units of your initial risk. If you risk 1.50 a share and the target is 3.00 away, the target is 2R. A full stop-out is -1R. Tracking results in R instead of dollars lets you compare trades of different sizes on one scale.
How do I calculate risk reward on a short trade?
Same distances, mirrored. The stop sits above the entry and the target below it. Short at 1.08450 with a stop at 1.08700 and a target at 1.08075: risk 0.00250, reward 0.00375, ratio 1 : 1.5. Pick Short in the calculator and it checks that each level is on the right side.
Should I use my first or second target for the ratio?
Use the exits you will actually take. If you sell half at a 2R first target and the rest at a 3R second target, the trade pays (0.5 × 2) + (0.5 × 3) = 2.5R, not 3R. The calculator shows each target's ratio so you can blend them for your own split.
Does this calculator read my chart or my account?
No. It does arithmetic on the prices you type and nothing else. It does not see your chart, your broker account, or your trade history, and it leaves out spread, commissions, and slippage, which all pull the real ratio lower.
Benjamin Loh
Founder & Developer at SnapPChart
I build AI-powered tools for traders. I created SnapPChart to help day traders analyze chart patterns faster using computer vision and machine learning. Learn more · Follow on X
This calculator is for planning purposes only and is not financial advice. It computes risk, reward, and breakeven win rate from the prices you enter. It does not know your broker's fees, spread, or slippage, or whether price will reach your target. Trading involves risk of loss.