Risk Reward Calculator
Reward-to-risk ratio, R-multiple and the win rate you need to break even - from just an entry, a stop and a target. Add a win rate to see the expectancy per trade.
Your trade
Direction is worked out from your prices: a stop below the entry is a long, above it is a short. Give either a position size or a risk amount to see the money figures; size takes precedence if both are filled.
Reward : risk
Enter your entry, stop-loss and take-profit prices to see the ratio.
How the calculation works
Risk is what you lose if the stop is hit; reward is what you make if the target is hit. Both are measured from the entry, so the ratio does not depend on position size:
reward : risk = (take-profit − entry) ÷ (entry − stop)
example: ($63,600 − $60,000) ÷ ($60,000 − $58,800)
= $3,600 ÷ $1,200
= 3 : 1 (a +3R trade)
breakeven win rate = 1 ÷ (1 + 3) = 25%
expectancy at 40% win rate = 0.4 × 3 − 0.6 = +0.6RThe breakeven win rate tells you how often a setup has to work before it makes money. Expectancy combines the ratio with your actual win rate to give the average result per trade in R - the single number that decides whether a strategy is worth trading. Neither figure includes fees or slippage, which lower the real result slightly.
Risk : reward FAQ
How is the risk-reward ratio calculated?
Risk is the distance from entry to stop-loss; reward is the distance from entry to take-profit. Reward ÷ risk is the ratio. A $60,000 entry with a $58,800 stop and a $63,600 target risks $1,200 to make $3,600, a 3:1 reward-to-risk ratio, also written as 3R.
What is an R-multiple?
R is the amount you risk on a trade - the loss if the stop is hit. An R-multiple expresses the outcome in units of that risk: a trade that makes three times what it risked is +3R, a stop-out is −1R. Measuring in R makes trades of different sizes comparable and is how most journals track expectancy.
What is the breakeven win rate?
The win rate at which a strategy neither makes nor loses money before fees: 1 ÷ (1 + reward:risk). At 1:1 you need 50%, at 2:1 you need 33.3%, at 3:1 you need 25%. If your actual win rate is above the breakeven rate for your typical ratio, the strategy has positive expectancy.
What is expectancy per trade?
Expectancy = (win rate × reward) − (loss rate × risk). In R terms: win rate × RR − (1 − win rate). A 40% win rate at 3R gives 0.4 × 3 − 0.6 = +0.6R, meaning you earn 0.6 times your risk per trade on average. Multiply by your risk amount for the expected dollar value.
Is a higher reward-to-risk ratio always better?
No. Targets further away are hit less often, so win rate falls as the ratio rises. What matters is the combination: expectancy. A 1.5R setup that wins 55% of the time (+0.375R) beats a 5R setup that wins 15% of the time (−0.1R). Track both numbers in a journal rather than chasing one of them.
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Find out your real win rate and expectancy
The Trnd Tools trade journal records every position in R, so the win rate you plug in here becomes a measured number rather than a guess. Free for up to 10 trades a month.
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