Risk-Reward Calculator
Plan your trades with precision. Calculate risk-reward ratios, potential profits, and losses to make informed trading decisions.
Risk-Reward Calculator
Calculate your trade's risk-reward ratio and potential profit/loss
Trade Parameters
Enter your position size to calculate potential profit/loss
Risk-Reward Analysis
Enter your trade parameters to see the risk-reward analysis
Understanding Risk-Reward Ratio
The risk-reward ratio is a fundamental concept in trading that compares the potential profit of a trade to its potential loss. It's calculated by dividing the reward (profit target) by the risk (stop-loss distance).
Formula:
Risk-Reward Ratio = |Take Profit - Entry| ÷ |Entry - Stop Loss|
- • 1:1 ratio - Break-even over time with 50% win rate
- • 1:2 ratio - Profitable with 34% win rate
- • 1:3 ratio - Profitable with 25% win rate
Best Practices
Minimum 1:1.5 Ratio
Always aim for at least 1.5:1 reward-to-risk ratio to account for trading costs and human error.
Position Sizing
Never risk more than 1-2% of your total portfolio on a single trade, regardless of the ratio.
Set Levels First
Always determine your stop-loss and take-profit levels before entering a trade.
Stick to Your Plan
Don't move your stop-loss further away or exit early without a valid reason.
Example Calculation
Trade Setup:
• Entry Price: $20,000
• Stop-Loss: $19,800
• Take-Profit: $20,600
• Position Size: 0.5 BTC
Results:
• Risk per Unit: $200
• Reward per Unit: $600
• Risk-Reward Ratio: 1:3.00
• Potential Profit: $300