Risk/Reward Calculator
Calculate risk-reward ratios and R multiples for your trading setups. Essential for evaluating trade quality before entry.
Educational use only. Not financial advice. Results are estimates. Trading involves risk. Read full disclaimer.
The risk-reward ratio is one of the most important metrics for evaluating trading setups. It tells you how much you stand to gain for every dollar you risk. Combined with your win rate, it determines your trading expectancy and long-term profitability. This calculator helps you quickly assess whether a trade setup is worth taking based on its risk-reward profile.
Risk/Reward Calculator
Results
Risk
$5.00
Reward
$10.00
R Multiple
1:2.00
Risk %
5.00%
Reward %
10.00%
Estimates only.
How to Use This Calculator
- Enter your entry price: The price at which you plan to enter the trade.
- Enter your stop loss price: The price where you'll exit if the trade moves against you (your risk).
- Enter your target price: The price where you'll take profits (your reward).
- Review the results: The calculator shows your risk, reward, R multiple, and percentage moves.
- Evaluate the setup: Generally, look for R multiples of 2 or higher for swing/position trades.
Formula
Risk = |Entry Price - Stop Loss Price|
Reward = |Target Price - Entry Price|
R Multiple = Reward ÷ Risk
Risk % = (Risk ÷ Entry Price) × 100
Reward % = (Reward ÷ Entry Price) × 100
Common Mistakes to Avoid
- Setting targets too far: Chasing unrealistic 1:10 ratios often results in lower win rates and missed profits. Set targets based on technical levels, not arbitrary ratios.
- Ignoring win rate: A 1:5 ratio with a 15% win rate is worse than a 1:2 ratio with a 50% win rate. Always consider both metrics together.
- Moving stops to improve ratios: Don't widen your stop loss just to get a better ratio. Your stop should be based on technical analysis, not math.
- Not considering market context: In trending markets, you might accept lower ratios. In choppy markets, you might need higher ratios to justify the trade.