Risk-Reward Ratio Calculator
Enter entry, stop, target, and position size. Get the reward-to-risk ratio, break-even win rate, and dollar risk/reward — for stocks, options, futures, or forex.
Trade setup
Risk : Reward
Enter entry, stop, target, and quantity. For long trades, stop must be below entry and target above. Reverse for shorts.
Track planned vs realized R:R automatically.
TradersForge logs your planned R:R at entry and your actual R-multiple at exit on every trade. Per-setup analytics surface the gap — are you hitting targets, exiting early, or getting stopped early?
FAQ
- What is a good risk-reward ratio?
- Most professional traders aim for 2:1 to 4:1 reward-to-risk on individual trades. Below 1:1 means you need to win more than half your trades to break even, which is hard to sustain. Above 5:1 typically means your target is unrealistic — you may rarely actually reach it. The sweet spot depends on your win rate: high-win-rate strategies (60%+) work with lower R:R; low-win-rate strategies (30-40%) need 3:1+.
- How do I calculate break-even win rate?
- Break-even win rate = 1 / (R:R + 1). So a 2:1 trade needs 33.3% wins to break even, 3:1 needs 25%, 4:1 needs 20%. Above the break-even rate, expectancy is positive. Below, you're losing money even with winning trades.
- How is risk-reward different from R-multiple?
- Risk-reward is the PLANNED ratio at entry — what you intend the trade to be. R-multiple is the ACTUAL outcome — how many R you made or lost. A 3:1 R:R trade can end as +1.5R if you exited early, or -0.8R if you got stopped before the target. Both are useful: R:R for trade selection, R-multiple for performance tracking.
- Should every trade have at least 2:1 reward to risk?
- Not necessarily — it depends on your strategy. Mean-reversion strategies often have 1:1 or 1.5:1 R:R but high win rates (70%+). Trend-following strategies often have 4:1+ R:R but low win rates (30-40%). The right ratio is whatever produces positive expectancy for YOUR setup, not a universal rule.
- How do I size positions based on risk-reward?
- Position sizing is independent of R:R — it's based on risk per trade. Size = (account × risk%) / stop distance. Use the position size calculator at /tools/position-size-calculator for the math. Once sized correctly, the R:R determines whether the trade is worth taking given your strategy's win rate.
- Does the calculator work for options?
- Yes — options use the ×100 contract multiplier automatically. For long premium, R:R is straightforward (entry premium → target premium and stop premium). For multi-leg structures, use max-loss as risk and max-profit as reward. The calculator covers single-leg cases; multi-leg structures should use the options profit calculator at /tools/options-profit-calculator for accurate P/L diagrams.
- How does TradersForge use risk-reward in journaling?
- On every trade, TradersForge logs your planned stop and target — so the R:R is captured at entry. Per-setup analytics show your actual realized R-multiple distribution, which you can compare against your planned R:R. This reveals whether you're hitting targets, exiting early, or getting stopped before targets — three different problems requiring different fixes.