Risk-Reward Calculator - RR Ratio & Targets
Free risk-reward calculator for forex, crypto & stocks. Instantly see ratio, win-rate & trade quality to refine your 2025 strategy.
Risk-Reward Calculator
Calculate your risk-reward ratio and profitability analysis
Understanding Risk-Reward Ratios
Define Your Levels
Set your entry price, stop loss, and take profit levels based on technical analysis. These should be logical levels, not arbitrary percentages.
Calculate the Ratio
Risk = Entry - Stop Loss. Reward = Take Profit - Entry. The ratio is Reward ÷ Risk, expressed as 1:X format.
Assess Trade Quality
Generally, 1:2 or higher ratios are considered good. The higher the ratio, the lower your required win rate for profitability.
Consider Win Rate
Higher risk-reward ratios require lower win rates. Balance your strategy between achievable win rates and attractive ratios.
Risk-Reward Ratio Formula
Risk-Reward Ratio = (Take Profit - Entry Price) ÷ (Entry Price - Stop Loss) Example:
- Entry Price: $50.00
- Stop Loss: $48.00
- Take Profit: $56.00
- Risk: $50.00 - $48.00 = $2.00
- Reward: $56.00 - $50.00 = $6.00
- Ratio: $6.00 ÷ $2.00 = 1:3.0
Risk-Reward Scenarios
Poor Ratio
1:0.4Average Ratio
1:2.0Excellent Ratio
1:3.0Risk-Reward Psychology
Patience is Key
High risk-reward setups may have lower win rates but are more profitable long-term. Avoid the temptation to exit early just to secure small wins.
Quality over Quantity
Focus on fewer, high-quality setups with good risk-reward ratios rather than taking many low-ratio trades that require high win rates.
Stick to Your Plan
Pre-define your entry, stop loss, and take profit levels. Emotional decisions during trades often lead to poor risk-reward management.
Track Your Stats
Keep a trading journal to track your actual risk-reward ratios vs. planned ratios. This helps identify improvement areas.
Balance is Important
While high ratios are attractive, ensure your targets are realistic. Overly ambitious targets may never be reached.
Adapt Your Strategy
Different market conditions may require different risk-reward approaches. Trending markets allow for higher ratios than ranging markets.
Risk-Reward Trading Examples
Real-world scenarios showing how risk-reward ratios impact profitability
Conservative Strategy
Perfect for beginners and steady growth. Lower stress, easier to achieve, builds confidence.
Aggressive Strategy
Higher rewards but requires patience and discipline. Best for experienced traders.
Risk-Reward Calculator FAQ
Expert answers to common questions about risk-reward ratios and trading psychology
Need More Help?
Still have questions?
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