PosSize
Trade Planning

Risk/Reward Calculator

Evaluate trade quality by calculating your risk/reward ratio before entering a position.

01 — Trade Parameters
$
Your planned entry price
$
Your max loss exit point
$
Your target exit point
Position size (optional)
Risk / Reward Ratio
1 : 3.00
Excellent
Risk per Share
$5.00
Reward per Share
$15.00
Direction
Long 📈
Total Risk
$500.00
Total Reward
$1,500.00
Min Win Rate
25.0%
Risk $500.00Reward $1,500.00
To break even, you need to win at least 25.0% of trades with this setup.
Min Win Rate = 1 ÷ (1 + RR) = 1 ÷ (1 + 3.00) = 25.0%

What is the Risk/Reward Calculator?

A risk/reward calculator compares how much you stand to lose if a trade fails against how much you stand to gain if it works. Expressed as a ratio like 1:2, it is the fastest way to judge whether a setup is even worth taking before you commit capital.

Knowing your risk/reward also tells you the minimum win rate you need to break even. A trade with a 1:3 ratio can be profitable while losing most of the time — which is why disciplined traders screen every idea through this lens.

How to use it

  1. 01Enter your entry price — where you plan to open the position.
  2. 02Enter your stop-loss price — the distance to it defines your risk.
  3. 03Enter your take-profit / target price — the distance to it defines your reward.
  4. 04Read the risk/reward ratio and the minimum win rate required to break even at that ratio.

The formula

Risk/Reward = (Target − Entry) ÷ (Entry − Stop-Loss) • Break-even Win Rate = 1 ÷ (1 + R/R)

A 1:2 ratio needs only a ~33% win rate to break even; a 1:3 ratio needs ~25%.

Worked example

You enter at $100 with a stop at $95 (risk $5) and a target at $115 (reward $15).

Risk/reward = $15 ÷ $5 = 1:3.

Break-even win rate = 1 ÷ (1 + 3) = 25%. As long as more than a quarter of your 1:3 trades win, you are profitable.

Frequently asked questions

What is a good risk/reward ratio?+

Many traders look for at least 1:2 — risking one unit to make two. Higher ratios let you stay profitable with a lower win rate, but very high targets are hit less often, so the right ratio depends on your strategy's typical win rate.

How do I calculate the minimum win rate I need?+

Use Break-even Win Rate = 1 ÷ (1 + Risk/Reward). For a 1:2 trade that is 1 ÷ 3 ≈ 33%; for 1:1 it is 50%. Win more often than this and the strategy is profitable before costs.

Should I take a trade with a ratio below 1:1?+

Generally no. A ratio below 1:1 means you need to win more than half your trades just to break even, which is difficult to sustain. Most planning frameworks require a minimum of 1:1.5 or 1:2.

Does risk/reward guarantee profit?+

No single metric does. Risk/reward must be paired with a realistic win rate and consistent execution. A great ratio on setups you rarely win is not an edge.

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For educational purposes only. Not financial advice.