Risk:Reward Calculator
Key takeaways
- From the ₹100.00 entry, the stop risks ₹5.00 a share and the target offers ₹15.00 — reward is 3× the risk (1 : 3.0).
- At 1 : 3.0 the breakeven win rate is 25% — the rate at which profits and losses cancel out across many trades, before charges.
- The stop sits 5% from the entry price, the target 15%.
- With the target at ₹110.00 (2× the risk), the ratio would be 1 : 2.0 and the breakeven win rate 33.33%.
Reward per ₹1 of risk
Breakeven win rate
The win rate at which this ratio’s profits and losses cancel out over many trades — the ticks mark the 1:1, 1:2 and 1:3 breakevens.
About the Risk:Reward Calculator
The Risk:Reward Calculator compares what a trade stands to gain against what it stands to lose, using the entry, stop-loss and target prices planned before it is placed. Both sides are measured per share, so the ratio is independent of position size — doubling the quantity doubles the risk and the reward together and leaves the ratio unchanged.
It does not matter whether the setup is long or short. Risk and reward are both plain distances — entry to stop-loss, and entry to target — so a long with the target above the entry and a short with the target below it produce the same ratio.
The ratio is shown as "1 : X", meaning the planned reward is X times the planned risk. The breakeven win rate is 1 ÷ (1 + X): the proportion of trades taken at exactly this ratio that would have to be winners for the profits and the losses to cancel out over many trades. It is a crossover point derived from the ratio alone — arithmetic, not a forecast, and it says nothing about how many trades will actually reach their target.
A larger ratio lowers the breakeven win rate, which is why the two figures are usually read together rather than one at a time: this calculator computes both from the three prices entered and does not know, estimate or assume anyone's actual win rate. The ratio and the breakeven rate both show an em dash when the entry and stop-loss prices are equal, since the risk per share is then zero.
Frequently asked questions
How is the risk-reward ratio calculated?
Risk per share = |Entry − Stop-loss|. Reward per share = |Target − Entry|. The ratio X is reward ÷ risk, displayed as "1 : X". Absolute values are used on both sides so that long and short setups read identically.
What is a breakeven win rate?
It is the win rate at which a strategy taking trades at one fixed ratio comes out exactly even over many trades, before charges. A win gains X times the risk and a loss costs 1 times the risk, so the two balance when the win rate is 1 ÷ (1 + X). At 1:3 that is 25%; at 1:1 it is 50%.
Does a higher ratio mean a better trade?
The ratio is only one of the two numbers involved. It sets the win rate a series of trades at that ratio would need to break even, but it says nothing about whether that win rate is achievable — a distant target lifts the ratio and is also reached less often. The two have to be read together, and only the first of them is something this calculator can compute.
Does the ratio depend on how many shares I buy?
No. Risk and reward are both measured per share, so quantity cancels out of the division. Use the Position Size Calculator for the share count; this page answers a question that is independent of it.
Do brokerage and taxes change the breakeven win rate?
Yes — they raise it. Charges are paid on winners and losers alike, so the real breakeven sits above the figure shown here, which is calculated before costs. The Brokerage Calculator will give you the charges on a specific trade size.
What does the scale below the result show?
The upper scale places the ratio on a 0–5 axis with neutral gradations marked at 1:1, 1:2 and 1:3; the lower one places the breakeven win rate on a 0–100% axis with the ticks at those same three ratios' breakevens. The bands are factual gradations, not zones labelled good or bad. A ratio beyond 1:5 pins the marker at the edge while the printed figure above it stays exact.
Disclaimer: This calculator is for information and education only. It is not investment advice and not a recommendation or a tip, and it does not predict prices. Trading in shares and derivatives carries a risk of loss: futures and sold options are leveraged, and a loss on them can exceed the margin paid. Brokerage differs by broker, and brokerage, taxes and exchange charges change over time. A stop-loss order is not guaranteed to fill at its price; gaps and fast markets can make a loss larger than planned. Every figure is computed solely by applying the formula and assumptions stated on this page to the inputs you entered.