Every trade is a bet that the reward will be worth the risk. Enter your entry price, your stop loss and the risk–reward ratio you want, and this calculator gives you the take-profit price – plus the win rate you need for trades like this to pay off.
Risk–Reward Calculator
Your take-profit price for the risk–reward ratio you want.
Results are estimates for information only, not financial advice. Trading on leverage carries a high risk of losing money.
What Is The Risk–Reward Ratio?
The risk–reward ratio compares what a trade could make with what it could lose. If your stop loss is 5 points below your entry and your target is 10 points above it, you risk 5 to make 10: a ratio of 1:2.
The ratio matters because it decides how often you need to be right. At 1:1 you must win more than half your trades to make money. At 1:2 you can be wrong two times out of three and still break even, and at 1:3 you only need to win one trade in four.
How To Use The Calculator
- Choose the direction. Buy (long) if you expect the price to rise, Sell (short) if you expect it to fall.
- Enter your entry price and stop-loss price. The stop must be below the entry for a buy and above it for a sell.
- Enter the ratio you want. 2 means a 1:2 trade, where the target is twice as far away as the stop.
- Add your position size (optional) to see the risk and the potential reward in money.
The calculator shows the take-profit price, the risk and reward per unit, and the break-even win rate. The table underneath lists the targets for other common ratios, so you can see at a glance which target is realistic.
The Formula
Take profit = entry + (entry − stop loss) × ratio for a buy, or entry − (stop loss − entry) × ratio for a sell.
Break-even win rate = 1 ÷ (1 + ratio). A 1:2 trade breaks even at a 33.3% win rate.
Why It Matters To Traders
Many beginners close winning trades early and let losing trades run, which leaves them with small wins and large losses. Planning the target before you enter, from the stop and a fixed ratio, is one of the simplest ways to fix that habit.
It also keeps your expectations honest. A 1:5 target looks attractive, but if the price rarely travels that far, you will win far less often. Check the target against recent highs and lows, support and resistance, or pivot points before you commit to it.
Tips
- Place the stop where your idea is proven wrong first, then let the ratio set the target – not the other way round.
- Spreads and commissions reduce the real reward. Use the break-even calculator to see how far the price must move to cover them.
- Size the trade with the position size calculator, so a hit stop costs only what you planned.
Related Trading Calculators
Alternatively, see our full suite of free online trading calculators.
DayTrading.com’s free trading calculators are for education and planning only and are not financial advice. Trading with leverage is high risk, and you could lose any money you invest. Trade responsibly.