Risk/Reward Calculator
Enter your entry, stop-loss and take-profit to find your risk/reward ratio and the minimum win rate you'd need to break even. Check your trade expectancy and Kelly Criterion position size against your real win rate, and blend multiple partial take-profit levels into one weighted R-multiple.
Key takeaways
- R:R Ratio = reward per unit ÷ risk per unit — a 1:3 ratio means risking $1 to potentially make $3.
- Breakeven win rate = 1 ÷ (1 + R:R ratio) — at 1:3 you only need to win 25% of trades to break even; at 1:1 you need over 50%.
- Win rate and risk/reward always work together — a low win rate can still be profitable with a strong enough ratio, and a high win rate can still lose money with a weak one.
- This tool also calculates trade expectancy and Kelly Criterion position sizing against your real win rate, and blends multiple take-profit targets into one weighted ratio.
Breakeven win rate across risk/reward ratios
Key numbers
Trade quality
Win rate needed at different ratios
How the breakeven win rate changes across common risk/reward ratios \u2014 your current setup is highlighted.
| Risk : Reward | Breakeven win rate | Example (per $100 risked) |
|---|
Expectancy at different win rates
Using your current risk/reward ratio, here's your trade expectancy at a range of win rates \u2014 see where your actual win rate needs to sit to have an edge.
| Win rate | Expectancy (R) | Edge vs. breakeven | Action |
|---|
Understanding risk/reward ratio
Risk/reward ratio compares how much you stand to lose if a trade hits your stop-loss against how much you stand to gain if it hits your take-profit. It's calculated purely from price levels, independent of position size, account currency, or the instrument you're trading — the same arithmetic applies to a stock, a forex pair, or a crypto position.
A ratio of 3 (written 1:3) means you're risking one unit to potentially make three. In the default example on this page — entry $100, stop $95, target $115 — the risk is $5 per unit, the reward is $15 per unit, giving a 1:3 ratio.
Breakeven win rate: the number that puts the ratio in context
A risk/reward ratio alone doesn't tell you whether a strategy is profitable — you also need to know how often it wins. Breakeven win rate answers a specific question: at this ratio, what's the minimum percentage of trades I need to win just to avoid losing money, before considering spreads, commissions, or slippage?
At a 1:3 ratio, breakeven win rate is 25% — you can be wrong on three out of every four trades and still not lose money. At 1:1, it's 50%. At 1:0.5 (risking more than you stand to gain), it climbs to 67%. This is why many systematic traders deliberately favor setups with a ratio of 1:2 or better: it builds in room for a strategy to be wrong most of the time and still survive.
Win rate and risk/reward are inseparable
Neither number means much without the other. Consider two traders, both risking $100 per trade over 100 trades: Trader A wins 70% of the time but only makes half of what they risk on winners (a 1:0.5 ratio) — their expected result is +0.05R per trade, or about $500 total. Trader B wins only 40% of the time but at a 1:3 ratio — their expected result is +0.6R per trade, or about $6,000 total, twelve times more, despite winning far less often. The ratio, not the win rate alone, usually does more of the work.
Trade expectancy: your edge in one number
Expectancy converts win rate and risk/reward into a single expected value per trade, in units of risk (R) or in dollars.
A positive expectancy means a strategy has a mathematical edge over a large enough sample of trades; a negative expectancy means it doesn't, no matter how a handful of recent trades felt. Expectancy is a long-run average — it says nothing about any single trade, which can still lose even with strongly positive expectancy, or win despite negative expectancy. The edge only shows up reliably over many trades.
Kelly Criterion: sizing your edge
Developed by J.L. Kelly Jr. at Bell Labs in 1956, the Kelly Criterion estimates the mathematically optimal fraction of capital to risk per trade, given a win rate and risk/reward ratio.
At a 40% win rate and a 1:3 ratio, full Kelly suggests risking 20% of capital per trade — mathematically optimal for long-run growth, but aggressive enough to produce large drawdowns along the way. In practice, most traders use a fraction of full Kelly, commonly half or quarter Kelly, trading some growth rate for a much smoother equity curve. Kelly is also highly sensitive to the accuracy of your win rate and ratio estimates, which are usually based on a limited sample and carry real uncertainty.
Multi-target trades: blending several outcomes into one ratio
Many traders don't exit an entire position at a single target — they close part of it at each of several levels. Blending these into one weighted-average R-multiple shows the trade's overall risk/reward profile: closing 40% of a position at 2R, 30% at 4R, and the remaining 30% at 8R blends to a 4.4R weighted average, considerably better than any single conservative target alone, while still locking in partial profit along the way.
What this calculator doesn't do
It doesn't know your actual win rate — that has to come from your own trading history or a backtest, and a small sample size makes any win rate estimate unreliable. It also doesn't include spread, commission, funding, or slippage, all of which quietly raise the effective breakeven win rate above the raw math shown here. Build in a buffer above the calculated breakeven point before treating a strategy as genuinely profitable.
Glossary of terms
- Risk/reward ratio (R:R)
- The potential reward on a trade divided by the potential risk, both measured from entry to the relevant price level.
- R-multiple
- A trade's result expressed as a multiple of the amount risked — a trade that risks $200 and makes $600 is a +3R result.
- Breakeven win rate
- The minimum percentage of trades that must win, at a given R:R ratio, to avoid losing money before costs.
- Expectancy
- The average expected result per trade given a win rate and risk/reward ratio — a strategy's long-run mathematical edge, in R or dollars.
- Kelly Criterion
- A formula estimating the optimal fraction of capital to risk per trade to maximize long-run growth, given a win rate and risk/reward ratio.
- Half / quarter Kelly
- Risking half or a quarter of the full Kelly-suggested fraction, trading some theoretical growth for meaningfully smaller drawdowns.
- Multi-target exit
- Closing a position in stages across multiple take-profit levels rather than all at once, each with its own weight and R-multiple.
- Edge
- The amount by which a strategy's actual win rate exceeds (or falls short of) its breakeven win rate at a given ratio.
How to use this calculator
Choose Long or Short
Select the direction of your planned trade.
Enter entry, stop-loss and take-profit
Add the three price levels that define your trade setup.
Read your R:R ratio and breakeven win rate
Review the ratio and the minimum win rate your strategy would need to break even at that ratio.
Check expectancy with your real win rate
Switch to the Expectancy tab and enter your actual or backtested win rate to see your edge and Kelly sizing.
Model partial exits if relevant
Use the Multi-Target tab to blend several take-profit levels into one weighted R-multiple, then click Calculate to lock in the numbers or Clear to start fresh.
Common mistakes & tips for using risk/reward well
- Moving the stop-loss to flatter the ratio. The stop should sit where the trade idea is genuinely invalidated, not wherever produces a nicer-looking number.
- Picking an unrealistic take-profit. A target price rarely reaches produces a beautiful ratio and a terrible real-world win rate — set targets at levels price actually trades to.
- Judging a strategy on win rate alone. A 70% win rate with a 1:0.5 ratio can still lose money; always check the ratio and win rate together.
- Ignoring trading costs. Spread, commission, and slippage all raise your effective breakeven win rate above the raw calculation — build in a buffer.
- Using full Kelly position sizing. It's mathematically optimal for growth but produces large drawdowns; most traders use a fraction of it for a smoother ride.
- Trusting a small sample win rate. A win rate from 10–20 trades is statistically noisy — Kelly and expectancy figures based on it can be badly misleading until the sample grows.
Example setups
A few realistic entry, stop and target combinations — click one to load it into the Risk/Reward Ratio tab above.
Your saved setups
Click "💾 Save setup" above to keep the trade you're currently checking — it's stored privately in this browser, not sent anywhere, so it'll be here next time you visit on this device.
High win rate vs. high risk/reward — a side-by-side example
Two traders, both risking $100 per trade over 100 trades, with very different styles.
| Trader | Win rate | Ratio | Expectancy | Result over 100 trades |
|---|---|---|---|---|
| Trader A (high win rate) | 70% | 1:0.5 | +0.05R | +$500 |
| Trader B (high ratio) | 40% | 1:3 | +0.60R | +$6,000 |
Trader B wins less than half as often as Trader A, but ends up twelve times more profitable, purely because their ratio does more work per winning trade than Trader A's high win rate can offset for its weak ratio. Neither approach is universally "better" — a very high win rate can absolutely work at a lower ratio, and a very low win rate can fail even at a strong ratio if it's below breakeven — but the ratio deserves at least as much attention as the win rate when evaluating a strategy.
Frequently asked questions
Have feedback on this calculator, or spotted something that looks off? Use the feedback widget below or reach out via the About page — we periodically review these tools for accuracy.
- Van K. Tharp. Trade Your Way to Financial Freedom (2nd ed., 2007, McGraw-Hill). — origin of the R-multiple and expectancy framework this calculator's Expectancy tab is built on.
- Kelly, J. L. Jr. (1956). "A New Interpretation of Information Rate." Bell System Technical Journal. — the original derivation of the Kelly Criterion used for the position-sizing figures on the Expectancy tab.
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