Use this free risk reward ratio calculator to turn an entry, a stop and a target into an R:R ratio — and the win rate that ratio has to clear before it makes money.
How the risk reward calculator works
Enter your entry price, your stop-loss and your target. The tool measures the two distances, divides reward by risk, and reports the ratio alongside the breakeven win rate that ratio implies. Add your actual win rate and it also returns expectancy in R — the average number of risk-units each trade is worth.
The ratio is only half the picture
A 5:1 setup is not better than a 2:1 setup if the wider target is reached a quarter as often. Ratio and win rate are linked, usually inversely, and only the pair together tells you whether an approach makes money. That is why the breakeven win rate sits directly beside the ratio here: it converts an abstract ratio into a testable claim about your own hit rate.
A worked example
Buy at $100 with a stop at $95 and a target at $115. Risk is $5, reward is $15, so the ratio is 3:1 and the breakeven win rate is 25% — win more often than one in four and the setup makes money before costs. At a 40% win rate, expectancy is +0.6R per trade. Drop the win rate to 25% and expectancy falls to exactly zero; drop it to 20% and the same 3:1 setup now loses money. The ratio never changed.
How to read the results
Compare the breakeven win rate against the hit rate you actually achieve on this kind of setup, not the one you hope for. If you do not know your hit rate, that is the number to go and measure — the ratio alone cannot tell you whether a strategy is profitable. Expectancy in R is the figure to track over time, because it makes setups of different sizes directly comparable.
Common mistakes
The first is chasing ever-higher ratios. Distant targets are hit less often, and a 10:1 setup that fills once in twenty attempts is worse than a 2:1 setup that works half the time.
The second is measuring the ratio from a target you will not actually hold for. If you habitually take profits early, your real ratio is the one you realize, not the one you drew on the chart — and the breakeven math shifts accordingly.
The third is ignoring costs. Spread, commission and slippage all come out of the reward side, and on short-horizon trades they can turn a marginally positive expectancy negative.
Where to go next
A ratio only becomes a strategy once you pair it with a win rate, which is exactly what the trade expectancy calculator does. To size the trade itself once the stop is set, use the position size calculator. For judging a system on more than one trade at a time, the Sharpe ratio explained covers return per unit of volatility, and what makes a trading system robust covers whether the edge survives outside the sample you found it in.
Frequently asked questions
What is a good risk reward ratio?
There is no universal answer — it depends entirely on your win rate. The useful test is whether your hit rate clears the breakeven rate the ratio implies.
Where does the breakeven formula come from?
Setting expectancy to zero: p·R − (1 − p) = 0 solves to p = 1 ÷ (1 + R). At 3:1 that is 25%.
Does it work for short trades?
Yes — put the stop above the entry and the target below. The distances, and so the ratio, work the same way.
Educational tool, not financial advice. Past and modeled results do not guarantee future performance.
Where to invest: brokers with fractional shares
To act on what this tool shows you, you’ll need a brokerage account. These are established brokers we use that support fractional shares — buying a slice of a share by dollar amount, which makes dollar-cost averaging and diversifying with small amounts easy:
- Robinhood — commission-free investing with fractional shares from $1, and the only major broker offering a daily recurring-investment schedule. Recommended for most beginner-to-intermediate investors who want the simplest way to automate investing — see how to automate your investing for the full setup.
- Charles Schwab — fractional shares of most U.S.-listed stocks and ETFs from $1, commission-free online.
- Fidelity — “Stocks by the Slice” fractional investing from $1, with strong research and low-cost index funds.
Referral disclosure: the broker links above are referral links. If you open and fund an account through them we may receive a referral reward at no cost to you; it never affects our tools or conclusions. This is educational information, not investment advice — choose the broker that best fits your needs.