Risk-Reward Ratio Calculator
A trade is a bet with a price: the distance to your stop is what you pay when wrong, the distance to your target is what you make when right. The ratio between them decides the win rate you need just to break even — a 1:2 trade only needs to work 33% of the time; a 2:1 trade needs 67%.
Enter entry, stop and target (long or short — the calculator detects the direction). Add your realistic win rate and it also computes your expectancy: the average rupees you make or lose per share per trade over many trades.
How it works
- Risk per share = |entry − stop|; reward per share = |target − entry|; R:R = reward ÷ risk.
- Breakeven win rate = risk ÷ (risk + reward) — the identity every system must beat.
- Expectancy = win% × reward − (1 − win%) × risk.
Frequently asked questions
What is a good risk-reward ratio?
There is no universally 'good' number — R:R and win rate trade off against each other. Wide targets (1:3) hit less often; tight targets (1:1) hit often but one loser eats a winner. What matters is the pair: a 1:2 ratio with a 40% win rate is a profitable system; 1:1 with 45% is a losing one.
What does the breakeven win rate mean?
The win percentage at which your system makes exactly zero before costs. At 1:1 you must win 50% of trades; at 1:2, 33.3%; at 1:3, 25%. If your honest historical win rate is below the trade's breakeven rate, the setup loses money no matter how it feels.
What is expectancy?
Your average result per trade over many trades: win% × average win − loss% × average loss. Positive expectancy compounded across hundreds of trades is the whole game; a single trade's outcome is noise. Charges then subtract from it — check the intraday profit calculator for what they cost.
Should I move my target to improve the ratio?
Only if the market structure supports it — a target is a price the move can plausibly reach (resistance, measured move), not a number that makes the spreadsheet pretty. Inflating targets quietly converts a real 1:1.5 system into an imaginary 1:3 one.
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This tool is an educational estimate, not investment or tax advice. Rates and rules change — verify current figures and consult a professional before acting.