Risk Reward Ratio Calculator
Enter your entry, stop and target and this returns the risk/reward ratio, the dollar risk and reward per share, and — most usefully — the win rate that ratio must beat before the strategy makes money.
The two numbers together
Risk/reward on its own means nothing. A 5:1 setup that wins 10% of the time loses money; a 0.5:1 setup that wins 80% of the time makes money. The ratio is only half of the pair, and the break-even win rate is how the two halves get compared.
Break-even win rate = 1 ÷ (1 + R). At 3:1 that is 25%; at 1:1, 50%; at 0.5:1, 67%. Those are the thresholds your actual win rate has to clear.
| Risk / reward | Break-even win rate |
|---|---|
| 0.5 : 1 | 66.7% |
| 1 : 1 | 50.0% |
| 1.5 : 1 | 40.0% |
| 2 : 1 | 33.3% |
| 3 : 1 | 25.0% |
| 5 : 1 | 16.7% |
The planned ratio is not the realised one
This calculator prices the trade you intend to take. What determines your results is the ratio you actually achieve, and those differ for reasons that are entirely behavioural: taking profits early at 1.2R because green is comfortable, moving a stop wider because it is about to be hit, closing at breakeven out of nerves. A trader planning 3:1 and realising 1.1:1 needs a 48% win rate, not 25%, and usually has no idea the gap exists.
The only way to know your realised ratio is to record entry, stop and target before the trade resolves, then compare against the exit. Reconstructed afterwards, the numbers are unreliable in a specific direction — memory edits toward the plan.
Ratios that are too good
A setup showing 10:1 usually means the target is unreachable or the stop is too tight to survive noise. Both show up as an excellent ratio on paper and a poor win rate in practice, which is why the ratio alone is such a weak filter. Check the target against the instrument's actual range over your holding period before believing it.
Why the realised ratio undershoots the planned one
Prospect theory: people are risk-averse over gains and risk-seeking over losses relative to a reference point[1] — which takes profit early and lets a loss run past its stop. Planned R:R is what you type here; realised R:R is what survives that.
The number is the easy part
Everything above is arithmetic, and anyone opening this page gets the same answer. What no calculator can settle is whether you took the trade on these terms, or are describing — afterwards — the version of it that worked out.
That is what a trade recorder is for: the trade committed before it resolves, timestamped and sealed on the spot, on a Merkle-anchored log a stranger can check without kappi's cooperation. The plan you typed here stops being a plan you remember having. $15/month, no free tier.
Sources
Frequently asked questions
How do I calculate risk reward ratio?
Divide the distance from entry to target by the distance from entry to stop. Entry $100, stop $96, target $112 gives 12 ÷ 4 = 3:1.
What win rate does a 2:1 risk reward need?
33.3% before costs, from 1 ÷ (1 + 2). Commissions and slippage push the real requirement a few points higher.
Is a higher risk reward ratio always better?
No. Higher ratios usually come with lower win rates, and very high ratios often indicate an unreachable target or a stop too tight to survive normal noise.
Why is my realised risk reward worse than planned?
Almost always early exits on winners and widened stops on losers. Measuring it requires recording the plan before the fact, since memory reliably edits toward the intention.