FREE TRADING TOOLS

Free risk/reward ratio calculator for traders

The risk/reward ratio is the single most important metric for determining whether a trade is worth taking. This calculator instantly shows you whether the potential gain justifies the risk and what win rate you need to be profitable.

How to use this calculator

Step 1: Enter your planned entry price. Step 2: Enter your stop loss price. Step 3: Enter your take profit target price. The calculator shows your risk/reward ratio, potential profit, potential loss, and breakeven win rate.

Risk/Reward Calculator

Formula: R:R = (Take Profit − Entry) ÷ (Entry − Stop Loss)

Example — Long trade: Entry $50, stop loss $48, target $56. Risk = $2, Reward = $6. R:R = 1:3. Breakeven win rate = 25%.

Example — Short trade: Entry $100, stop loss $105, target $88. Risk = $5, Reward = $12. R:R = 1:2.4. Breakeven win rate = 29.4%.

Understanding breakeven win rate

The breakeven win rate tells you what percentage of trades you need to win to break even at a given risk/reward ratio:

1:1 — Need to win 50% of trades to break even
1:2 — Need to win 33% of trades
1:3 — Need to win 25% of trades
1:5 — Need to win only 17% of trades

Why minimum 1:2 is recommended

Professional traders typically require a minimum 1:2 risk/reward ratio before entering any trade. At 1:2, you can be wrong on 60% of your trades and still make money. This provides a comfortable margin of error that accounts for the inevitable losing streaks in any trading strategy.

AskTrade’s research reports calculate the risk/reward ratio for every trade setup using actual technical levels as targets.

Disclaimer: This is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.

Experience Multi-Agent Research

12 AI agents collaborate to deliver institutional-quality analysis. Try it from $2.

Start Trading →

AskTrade analyses are AI-generated and do not constitute financial advice.