Risk-Reward Ratio Calculator
Reward earned per unit of risk on a trade
🔒 Zero upload · Method · · Disclaimer · Risk-Reward Ratio Calculator
Working out reward earned per unit of risk on a trade is easier with Risk-Reward Ratio Calculator, which answers as you type. Enter Entry Price ($), Stop-Loss Price ($) and Target Price ($) in any order — Risk-Reward Ratio recalculates on every edit. The answer from Risk-Reward Ratio arrives with its working attached. Risk-Reward Ratio shines when speed matters. No account is needed for Risk-Reward Ratio. The browser does the arithmetic. Looking for risk reward ratio calculator trading stop loss target r multiple or free online risk-reward ratio calculator? Risk-Reward Ratio covers both. Run Risk-Reward Ratio twice to find the driving input. Risk-Reward Ratio is free, instant and local.
What the defaults give
Entry $100, stop $95, target $115 gives a risk-reward ratio of 1 : 3.00.
Risk is $5 a share and reward is $15, so a 25% win rate is enough to break even before costs.
The formula
Risk = |entry − stop|
Reward = |target − entry|
Ratio = reward ÷ risk
Both differences are taken as absolute values, so the same maths works for a short: entry $100, stop $105, target $90 gives risk $5 and reward $10, or 1:2. The stop is always the losing side and the target is always the winning side, whichever direction the trade runs.
Worked examples
100 / 95 / 115 → 5 risk, 15 reward = 1:3.00
100 / 90 / 110 → 10 risk, 10 reward = 1:1.00
100 / 98 / 112 → 2 risk, 12 reward = 1:6.00
50 / 47 / 59 → 3 risk, 9 reward = 1:3.00
100 / 105 / 90 (short) → 5 risk, 10 reward = 1:2.00
100 / 95 / 104 → 5 risk, 4 reward = 1:0.80
What the ratio implies about win rate
The break-even win rate is 1 ÷ (1 + ratio). At 1:1 you need to win more than half your trades; at 1:2, more than a third; at 1:3, more than a quarter. That is the whole argument for letting winners run: the required accuracy falls fast as the ratio rises.
The arithmetic assumes the target is actually reached. A ratio calculated to a level price never visits is fiction, and a stop placed inside normal noise gets hit before the move develops. Both errors inflate the ratio on paper while lowering the real result.
Costs and slippage sit outside
Commission, spread, funding and slippage reduce reward and increase risk at the same time. A 1:3 setup with $0.10 of round-trip cost on a $5 stop becomes 1:2.9, which is small; on a $0.50 stop it becomes 1:2.4, which is not. Short-dated options and high-spread instruments lose most of an apparently good ratio to friction.
Position size decides how much the ratio is worth. Risking a fixed 1% of the account per trade turns a 1:3 into a defined outcome; risking a variable amount means the ratio describes the chart rather than your results.
Frequently Asked Questions
What does a 1:3 risk-reward ratio mean?
You stand to make three dollars for every dollar risked. With a $5 stop and a $15 target on a $100 entry, that is 1:3.
What win rate do I need at 1:3?
More than 25% to profit before costs, because one win covers three losses. The break-even rate is 1 divided by (1 + ratio).
Does the calculator work for short trades?
Yes. It uses absolute differences, so an entry at $100, stop at $105 and target at $90 returns 1:2 without needing a direction setting.
Should the stop or the target decide the ratio?
Place the stop where the idea is proven wrong, then see what the ratio is. Moving the stop closer to manufacture a better ratio usually means getting stopped by normal noise.
Why do my results not match the ratio?
Because targets are not always reached and costs are not in the model. Commission, spread and slippage shrink reward and enlarge risk, and a target at an untraded price is not real reward.
EV/EBITDA Calculator and other Finance tools
EV/EBITDA Calculator · Quarterly Estimated Tax Calculator · Required Minimum Distribution Calculator · Roommate Rent Split Calculator · Escrow Payment Calculator · Property Appreciation Calculator · Finance Guides