Risk calculator
Risk/Reward Calculator
Measure entered stop and target price distances and reward/risk ratios for coherent long or short scenarios.
Educational use only. Not financial advice. Results are estimates. Trading involves risk. Read full disclaimer.
This tool measures the distances from entry to stop and target and their ratio. It does not estimate execution probability, recommend a trade or determine profitability. Long scenarios require stop below entry and target above it; short scenarios require the reverse. Fees, slippage and gaps can change realized outcomes.
Risk/Reward Calculator
Results
Risk
$5.00
Reward
$10.00
R Multiple
1:2.00
Risk %
5.00%
Reward %
10.00%
Measures entered price distances only, not trade quality or probability. Excludes costs; gaps and slippage can exceed planned stop risk.
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 intended stop price; actual execution may differ.
- Enter your target price: Your assumed target price; reaching or executing there is not assured.
- Review the results: The calculator shows your risk, reward, R multiple, and percentage moves.
- Check assumptions: Distances do not determine the chance of reaching a target or stop.
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
- Treating a large ratio as proof of a profitable trade.
- Ignoring transaction costs or assuming all losses execute at the stop.
- Using target and stop distances as substitutes for observed average outcomes.
Frequently Asked Questions
Does a higher ratio mean a better trade?
No. A ratio measures price distances, not likelihood of reaching either price, trade quality or suitability.
What is an R multiple?
Reward distance divided by stop distance. Here it is a planned price-distance measure, not a prediction of realized returns.
How does expectancy relate to this?
If average wins, average losses and win rate actually match the assumptions, gross expectancy = win rate × average win - loss rate × average loss. Costs reduce net expectancy. Entered target and stop distances need not match realized averages.
What price ordering is valid?
Long: stop < entry < target. Short: target < entry < stop. Equal prices and stop/target on the same side of entry are rejected.
What does a ratio below 1 mean?
Target distance is smaller than stop distance. This alone does not determine profitability or whether a trade is worth taking.
How is this different from position sizing?
This tool calculates price distances and ratios. It does not calculate account exposure or choose a position size.
Can I use underlying prices for options?
Underlying price ratios do not describe option P/L, which is nonlinear and may depend on time value and volatility. This tool only measures the prices entered.
What do the percentages mean?
Stop and target distances divided by entry price. They are not account-risk or expected-return percentages.