Risk / Reward (R:R) calculator
Calculate the R:R ratio from entry, stop and target, and the minimum win rate you need to stay profitable.
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From numbers to practice
In the app every signal comes with entry, stop and target prices, and the results are public.
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What it calculates
Compares potential profit against potential loss (R:R). It also shows the minimum win rate needed to break even at that ratio — i.e. what share of your trades must be winners.
Formula
R:R = |Target − Entry| ÷ |Entry − Stop| Breakeven win-rate = 1 ÷ (1 + R:R) × 100%
Example
Given
- Entry — $100
- Stop — $95
- Target — $115
- Loss (risk): $100 − $95 = $5.
- Profit (reward): $115 − $100 = $15.
- R:R = $15 ÷ $5 = 3 → "1 : 3". Every $1 risked returns $3.
- Breakeven: 1 ÷ (1 + 3) = 0.25 → 25%.
Result: At 1:3 you break even with only 25% of trades winning. Anything above 25% is profit.
Tip
Look for 1:2 or better. At a poor R:R (say 1:0.5) you'd need to win over 67% of trades just to stay profitable — that's very hard in practice.
Frequently asked questions
- What is the R:R ratio?
- Potential reward divided by potential risk. 1:3 means $3 of expected profit for every $1 at risk.
- How is the breakeven win rate calculated?
- 1 ÷ (1 + R:R). At 1:3 you break even if 25% of trades win; anything above is profit.
- What is a good R:R?
- Usually 1:2 or higher. At a low ratio such as 1:0.5 more than 67% of trades must win just to stay profitable.
Further reading
- Position size and risk/reward: the 2 questions before every tradeHow many shares to buy and whether the trade is worth it — work out both before you enter. Formulas, a worked example and the most common mistakes.
- What a signal is and isn't: TP/SL, probability and track recordA signal is not a guarantee — it's a notice that a rule was met. How to read one, what TP/SL mean and which numbers to judge results by.
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