How to Use the Risk/Reward Calculator
Pick your symbol, then enter three prices; it works the same for long or short trades.
- Choose your symbol or asset class to set sensible price steps and starting values.
- Enter your planned entry price.
- Enter your stop-loss price, where you exit if the trade goes against you.
- Enter your take-profit price, your target.
The calculator measures the distance from your entry to each price, then shows the reward-to-risk ratio and the win rate you would need just to break even before costs.
Reading Your Reward-to-Risk Ratio
The reward-to-risk ratio compares how far your target is from your entry with how far your stop is. A 3:1 ratio means you aim to make three times what you risk on the trade.
The higher the ratio, the lower the win rate you need to come out ahead. At 1:1 you need to win more than half your trades to profit; at 3:1 you can be right only a quarter of the time and still break even before costs.
- Measure the distance from your entry, so the tool works for long and short trades alike.
- A good ratio does not fix a bad entry; it only sets the shape of your results.
- Spreads, commissions and slippage all shift the real break-even point against you.
Using It With a Trading Plan
Deciding the reward-to-risk before you enter keeps your targets honest and stops you moving the stop once the trade is live. Pair it with the position size calculator so the money you risk on each trade is consistent, and keep both inside your funded account rules.
For more on planning trades around losses, read our guide to trading risk management.
More Free Trading Tools
Size and fund the trade with River Valley Capital's other free calculators:
- Position size calculator to turn your risk into a trade size in lots.
- Pip value calculator to price a one-pip move in your account currency.
- Margin calculator to see the margin the position needs.
- Drawdown and payout calculator for your loss limit, floor and payout.