Risk/Reward Ratio Calculator
Know the math before you take the trade. Enter your entry, stop and target to see the reward-to-risk ratio, the risk and reward in percent, and the win rate you'd need just to break even.
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Risk / reward
A 2:1 reward-to-risk means you only need to win about 1 in 3 trades to break even. The break-even win rate is the hit rate at which this R:R nets zero — anything above it is an edge.
How it works
Reward-to-risk is the single most useful number in trade planning: reward per share (target − entry) divided by risk per share (entry − stop). A 3:1 trade makes three dollars for every one you risk if it works — so even a modest hit rate can be very profitable.
The break-even win rate makes that concrete. At 2:1 you only need to be right about 1 in 3 times to break even (1 ÷ (1 + 2) ≈ 33%); at 1:1 you need 50%. Pairing a high R:R with a realistic win rate is the heart of an edge — a great win rate with terrible R:R still loses money.
StockSetups shows the R:R on every setup's trade plan, so you can filter for the trades where the reward justifies the risk before you ever place an order.
Frequently asked
What is a good risk/reward ratio?
Many traders look for at least 2:1 (reward twice the risk), though it depends on your win rate. A high R:R lets you be profitable even when you're wrong more often than right.
How do you calculate risk/reward?
Risk = entry − stop. Reward = target − entry. Risk/reward ratio = reward ÷ risk. So an entry at 50, stop at 48 and target at 56 is a risk of 2 and reward of 6, or 3:1.
What is the break-even win rate?
The hit rate at which a given reward:risk nets zero: 1 ÷ (1 + R:R). At 2:1 it's about 33%; win more often than that and the strategy is profitable.
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