Aurora Finance
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
$
$
$
%
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

Position size calculator
Size the trade correctly.
Educational information only. Not personalised financial advice. Consult a qualified professional for decisions specific to your situation.