Calculate risk-reward ratios for trades with entry, stop-loss, and target prices showing potential profit, loss, and win rate requirements.
Every trade comes down to one arithmetic question: what you stand to gain against what you stand to lose. This calculator takes an entry price, a stop-loss price, and a target price and returns per-share risk, per-share reward, the reward-to-risk ratio, potential profit and loss in dollars, and the win rate needed just to break even. The figure most people misread is the last one: a 2:1 reward-to-risk trade needs only about a 33% win rate to cover its losses, not 50% or higher. The ratio prices the payoff; it never predicts how often the target gets hit.
A concrete input and expected output from the current implementation.
Input
Entry $50, stop-loss $45, target $60 (long trade)
Expected output
Risk per share: $5. Reward per share: $10. Reward-to-risk: 2.0 (written 1:2 risk-to-reward). Potential loss: $5 per share. Potential gain: $10 per share. Break-even win rate: 33.3%.
The stop sits $5 below entry and the target $10 above, so reward is exactly twice the risk. With a 2.0 payoff you break even at risk / (risk + reward) = 5/15, meaning one win covers two losses.
For a long trade, risk per share is entry minus stop-loss and reward is target minus entry; for a short trade both flip, since the stop sits above entry and the target below. The ratio divides reward by risk, so a result of 2.0 means every dollar risked pays two dollars if the target is reached. Nothing else - fees, slippage, dividends - enters the calculation unless you add it.
The calculator derives the win rate that makes expected value zero: risk divided by risk plus reward. A 1:1 trade needs a 50% win rate, a 2:1 trade needs 33.3%, a 3:1 trade needs 25%, which equals 1/(R + 1) for a reward-to-risk of R. Comparing this figure with your own historical win rate shows whether the ratio alone justifies taking the trade.
Both conventions appear in trading writing. Some express risk-to-reward (1:2), others reward-to-risk (2.0), and the calculator states which it uses; they describe the same trade. Confirm which side a broker, book, or mentor quotes before comparing ratios, and remember the target has to be reachable, not just arithmetically favorable.
No. The ratio only sizes the payoff; it says nothing about how often the target is hit. What it does give you is the win rate required to break even - 33% at 2:1, 25% at 3:1, 50% at 1:1. Compare that requirement against your actual historical win rate before deciding the trade is worth taking.
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