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