Risk-Reward Calculator
Risk–Reward Calculator compares a proposed target distance with the stop distance from the same entry price. A 2:1 result means the planned reward distance is twice the planned price risk, before probability, fees, slippage, and execution. The ratio describes geometry of one scenario; it does not say whether the target or stop is sensible or whether the trade has positive expectancy.
Runs locally — files stay on your deviceHow is a trade's reward-to-risk ratio calculated?
Divide the absolute target distance from entry by the absolute stop distance from entry.
Formula: Reward-to-risk = |target − entry| ÷ |entry − stop|
Reward-to-risk compares two price distances
Risk distance is the absolute difference between entry and stop. Reward distance is the absolute difference between target and entry. The ratio is often written reward:risk; a value of 2 corresponds to 2:1. Direction still matters—a long trade normally has stop below entry and target above it, while a short reverses those positions.
How it works
Enter entry, stop, and target prices from one scenario. Confirm that their ordering matches the intended long or short direction, then interpret the ratio alongside win probability and trading costs.
Key concepts
Payoff ratio is not expectancy
Expectancy also needs the probability and average size of wins and losses. A high ratio with a very low win rate can still lose money.
Absolute distance hides direction
The arithmetic uses magnitudes, so you must separately verify that stop and target lie on appropriate sides of entry.
When to use it
- Compare alternative targets or stop placements before an order.
- Check the price-distance ratio of a long or short scenario.
- Combine a payoff ratio with an independently estimated win rate.
When not to use it
- Do not treat a high ratio as proof that a target is reachable.
- Do not ignore whether prices are ordered logically for the trade direction.
- Do not compare ratios without including fees, spread, slippage, and probability.
Worked examples
Long setup at 100
- Input
Entry 100, stop 95, target 110- Expected output
Reward 10, risk 5, ratio 2:1
The upside distance is twice the downside distance.
Short setup
- Input
Entry 50, stop 53, target 44- Expected output
Reward 6, risk 3, ratio 2:1
For a short, the target is below and stop above entry.
Zero stop distance
- Input
Entry 100, stop 100, target 110- Expected output
Undefined ratio
Risk distance is zero, so division is not meaningful.
Common mistakes
Reading 2 as two percent
The result is a dimensionless distance ratio. Correction: Interpret it as two units of planned reward per one unit of planned risk.
Placing stop and target on the same wrong side
Absolute values can still produce a number from an illogical scenario. Correction: Check long or short price ordering before using the ratio.
Ignoring win probability
Ratio alone does not determine expected value. Correction: Evaluate realistic outcome probabilities and costs separately.
Best practices
- State whether the scenario is long or short.
- Use executable prices and include spread and fee assumptions.
- Review ratio together with probability, position size, and maximum tolerable loss.
Related operations and differences
Crypto Profit & Loss Calculator
Choose Crypto Profit & Loss Calculator when you need to calculate trade P&L after manual fees.; use Risk-Reward Calculator specifically for risk reward.
Crypto Position Size Calculator
Choose Crypto Position Size Calculator when you need to size a trade from account risk and stop distance.; use Risk-Reward Calculator specifically for risk reward.
Average Calculator
Choose Average Calculator when you need to find the arithmetic mean of a number list.; use Risk-Reward Calculator specifically for risk reward.
Bleed Calculator
Choose Bleed Calculator when you need to calculate finished artwork dimensions including bleed.; use Risk-Reward Calculator specifically for risk reward.
BMI Calculator
Choose BMI Calculator when you need to estimate body mass index locally for general information.; use Risk-Reward Calculator specifically for risk reward.
BMR Calculator
Choose BMR Calculator when you need to estimate basal metabolic rate using the Mifflin-St Jeor formula.; use Risk-Reward Calculator specifically for risk reward.
Limitations and privacy
- The calculation does not estimate probability, volatility, liquidity, fees, or slippage.
- This is a mathematical scenario, not investment advice. Prices can gap, orders can slip, fees can change, and losses can exceed a planned amount.
- One fixed stop and target cannot model trailing exits or partial closes.
Trade inputs are calculated locally in this browser. Toolbox does not connect to an exchange or wallet.
Frequently asked questions
Is 2:1 automatically a good trade?
No. Quality also depends on probability, costs, market conditions, and whether the levels are realistic.
Can the calculator handle short trades?
Yes mathematically, but you must place target below entry and stop above entry for a conventional short.
Why is entry equal to stop invalid?
It creates zero modeled risk distance, so the ratio would require division by zero.
Does reward-to-risk include position size?
No. It compares price distances; position size determines money at risk.