Risk/Reward & R-Multiple Calculator
Plan trades in units of risk (R). Enter entry, stop, and target to get the reward-to-risk ratio, the win rate you need to break even, and a position size based on how many dollars you are willing to lose.
How to use
- Enter the entry price, stop-loss, and target. A target below the entry is treated as a short trade.
- Enter the maximum dollars you are willing to lose to get a share count.
- After the trade, enter the exit price to log the realized R-multiple.
Formulas explained
Breakeven win rate ignores commissions and slippage. Slippage past a stop makes real losses bigger than 1R.
Worked example Hypothetical
Hypothetical: long at $50, stop $48, target $56. 1R = $2, reward = $6, so 3 : 1. You need to win more than 25% of trades like this to break even. Risking $200 → 100 shares. Exiting at $53 = +1.5R.
FAQ
What is a good risk/reward ratio?
There is no universal number. A 1:1 trade can be good with a high win rate, and a 3:1 trade can lose money if it rarely hits the target.
Why track R-multiples?
R normalizes results across trades of different sizes, so you can measure your average R (expectancy) per trade.
Does the stop guarantee my loss?
No. Gaps and fast markets can fill beyond your stop.
Risk/reward calculator explained for beginners
What this tool does
It compares how much you could lose (to your stop-loss) with how much you could gain (to your target), and shows the win rate you would need to break even over many trades.
What each input means
- Entry
- The price you buy (or short) at.
- Stop-loss
- The price where you plan to exit if the trade goes against you.
- Target
- The price where you plan to take profit.
- Max $ risk per trade
- The most money you are willing to lose on this trade.
- Actual exit
- Optional. Where you really got out, to measure the result in "R" (multiples of your risk).
How to read the results
Reward-to-risk of 2:1 means the target is twice as far from entry as the stop. The breakeven win rate is the share of trades you would need to win for wins and losses to cancel out; at 2:1, it is one trade in three. R-multiple expresses a result as a multiple of the amount you risked.
A short worked example (hypothetical)
Entry $50, stop $48, target $56. Risk is $2 per share and reward is $6, so reward:risk is 3:1. The breakeven win rate is 1 ÷ (1 + 3) = 25%.
Common mistakes
- Setting a target that is unrealistic just to make the ratio look good.
- Ignoring gaps: a stock can open past your stop.
- Forgetting fees on small trades.