The risk-reward ratio is one of the most important metrics in trading. It tells you how much you stand to gain relative to how much you risk on every trade. Our risk-reward ratio calculator computes the exact ratio between your potential profit and potential loss, along with the minimum win rate you need to break even.
Understanding your risk-reward ratio before entering a trade is essential for long-term profitability. A favorable ratio means you can be wrong more often than right and still make money. For example, with a 1:3 risk-reward ratio, you only need to win 25% of your trades to break even.
This calculator takes your entry price, stop-loss level, target price, and trade size to compute the dollar risk, dollar reward, risk-reward ratio, and break-even win rate. Use it to evaluate every trade before you place it.
