Calculator
Risk-reward calculator
The risk-reward ratio compares potential upside to potential downside on a trade. Combined with a realistic win rate, it decides whether a strategy has positive expected value.
Updated July 2026
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%
Reward : risk
3.00 : 1
Reward $15 vs risk $5 per share
Expected value / share
$3
Positive expectancy
How it works
R:R = (Target − Entry) / (Entry − Stop) ; EV = WinRate × Reward − LossRate × Risk
- Enter entry, stop-loss, and price target.
- Optionally enter a historical win rate to see expected value per trade.
Worked examples
- Entry $100, stop $95, target $115 → R:R = 3. At 40% win rate, EV = 0.4 × $15 − 0.6 × $5 = +$3 per share.
- R:R below 1.5 usually requires a very high win rate to be profitable after fees.
Frequently asked questions
What's a good risk-reward ratio?
Most systematic traders target R:R ≥ 2. Lower ratios need higher win rates to remain profitable.
Related
Educational information only. Not personalised financial advice. Consult a qualified professional for decisions specific to your situation.