Risk/Reward Calculator
Compare what you stand to gain against what you stand to lose — then find out how often you actually need to be right for the trade to make sense.
Used to turn the ratio into dollars.
Risk / Reward
1 : 3
Risking $2 to make $6 per share
Break-Even Win Rate
25%
Below this you lose money over time
Total Risk
-$100
On 50 shares
Total Reward
+$300
On 50 shares
What if you win this often?
40%Drag to see what this setup returns per trade at different win rates.
Expected Per Trade
$60
Over 100 Trades
$6,000
Verdict
Positive
At 1 : 3 you only need 25% accuracy to break even, and 40% clears it. This is why traders who are wrong more often than they are right can still make money.
Why the ratio decides more than the entry
A risk/reward ratio is pure geometry. It depends only on where your entry, stop and target sit — not on your account size, and not on how confident you feel.
Its value comes from what it demands of you. Every ratio implies a minimum win rate. Clear that rate and the strategy makes money; fall short and it does not, regardless of how good the individual trades looked.
| Risk / Reward | Win rate to break even |
|---|---|
| 1 : 0.5 | 66.7% |
| 1 : 1 | 50.0% |
| 1 : 1.5 | 40.0% |
| 1 : 2 | 33.3% |
| 1 : 3 | 25.0% |
| 1 : 5 | 16.7% |
This is why a trader who is wrong six times out of ten can be comfortably profitable, and why a trader who is right seven times out of ten can still lose. Accuracy alone tells you nothing until you know the size of the wins relative to the losses.
One caution: these thresholds are before costs. Spread and commissions raise the real break-even, and they hit the small side of the ratio hardest.
The concepts behind it
This website provides educational information only. It is not financial, investment, or trading advice. Break-even figures are before spread, commissions and financing costs, all of which raise the win rate a strategy actually needs.