Risk Reward Calculator

key_takeaways

Key takeaways

• The higher the R:R, the lower the win rate that breaks even.
• Fees raise the loss on a stopped trade and cut the gain on a winning one, so the net R:R is lower than the gross one.
• Win rate is not expectancy: a high win rate with a small R can still lose on average.

It also shows the win rate you need to break even and the expectancy at your own win rate.

How to use this risk reward calculator

1. Pick the direction and enter the entry and the stop. The stop sets the risk: the distance between the two is what you lose if the trade fails.
2. Give the target. Either type a target price, or switch to Target R:R and type the ratio you want. The tool then shows the target price that gives you that ratio, so it doubles as a take profit calculator.
3. Add fees if you want a net figure. Enter your own rate per side. Add a position size for money values, and your win rate for the expectancy. The win rate should come from your own closed trades, not from a guess.

The calculator opens with the hypothetical values of the worked example on this page, marked as example values. Replace them with your own, or press Clear to empty every field. The tool does not know your venue or your account, so enter your own fee and your own win rate.

Formula: risk reward ratio, break-even win rate and expectancy

risk   = |entry - stop|
reward = |target - entry|
R:R    = reward / risk

With a fee f per side (as a decimal):
net risk   = risk + f x entry + f x stop
net reward = reward - f x entry - f x target
net R:R    = net reward / net risk

break-even win rate = 1 / (1 + R)
expectancy (in R)   = W x R - (1 - W)

Read R as the reward measured in units of risk, and W as the share of trades that win, written as a decimal. A loss costs one unit of risk and a win earns R units, so expectancy is the average result per trade in R. With fees, the calculator redefines one unit of risk as the net risk, so a stop-out costs exactly one unit.

Win rate needed at each R:R

The two numbers are linked. The higher the R:R, the lower the win rate that breaks even. The example below ends with a grid that shows the effect for a set of sample ratios.

Worked example

What is a good risk reward ratio?

There is no single good number. A distant target needs fewer winners to break even, but price usually reaches a distant target less often. A target as close as the stop needs you to win more often than you lose. Which mix works depends on your strategy, the market and your costs, so the useful check is what your own closed trades show.

Does a higher risk reward ratio lower the win rate?

Often, yes. A target further from the entry is hit less often, so fewer trades win. The break-even math moves the other way, which is why the table above exists. A high R:R does not make a strategy profitable on its own, and neither does a high win rate.

How do fees change the ratio?

Fees raise the loss on a stopped trade and cut the gain on a winning one, so the net R:R is lower than the gross one. The effect grows when the stop is tight, because the fee is a larger share of a small risk. If the fees eat the whole reward, nothing is left at the target. Where the fee per side comes from is explained in maker vs taker fees.

Limits of this calculator

It assumes every trade risks the same amount and every win earns the same multiple of it. Real trading has partial exits, trailing stops and changing size. Expectancy is an average over many trades, not a forecast for the next one, and a win rate from a handful of trades is unstable.

The stop is treated as a fixed loss. If the market gaps or fills you at a worse price, the realized loss is larger than one unit of risk. Funding payments, margin rules and spreads are not modeled, and the fee field is one flat percentage per side. Use the result to test your own assumptions, not as a signal. For stop placement, read the stop-loss basics.

Risk reward calculator FAQ

How do I calculate the risk reward ratio?

Divide the distance from the entry to the target by the distance from the entry to the stop. The result is the reward you aim for per unit of risk. The worked example on this page goes through each step with hypothetical prices.

What is the break-even win rate formula?

Break-even win rate = 1 / (1 + R), where R is the reward divided by the risk. At that win rate the wins and the losses cancel out and the expectancy is zero, before any cost you left out of the calculation.

What is the difference between win rate and expectancy?

Win rate is how often you win. Expectancy is the average result per trade, W x R - (1 - W). A high win rate with a small R can still lose money on average, and a low win rate with a large R can still make money. The worked example on this page shows both cases with hypothetical numbers.

Can I find the take profit price from a target R:R?

Yes. Switch the target input to Target R:R and enter the ratio you want. For a long, the target is entry + ratio x (entry - stop). For a short, it is entry - ratio x (stop - entry).

Is the fee entered as a round trip or per side?

Per side. The calculator charges it on the entry and again on the exit, each on its own price. If you only know the round-trip cost, halve it.

How do I measure my win rate?

Count your closed trades in a journal and divide the winners by the total. Keep one definition of a win, use enough trades for a stable figure, and record the planned and the realized R of each trade. The Excel template on this page has a journal that does the counting for you. For the habit itself, read the trading journal guide.

Does this calculator work for any market?

The math works for any instrument that has an entry, a stop and a target. Enter prices in the units of your market and the fee as the percentage your own account pays.