Risk–Reward Ratio Calculator

Risk (per share)
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Reward (per share)
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Risk–Reward Ratio
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Enter all three values. Rule: Entry > Stop and Target > Entry.

Formulas
risk = entry − stop   |   reward = target − entry   |   R:R = reward ÷ risk

Risk–Reward & Win-Rate Guide

1) What is the Risk–Reward Ratio?

The R:R compares potential loss to potential profit on a trade. If you risk ₹1,000 to gain ₹3,000, the R:R is 1:3. Many traders aim for at least 1:2 to stay profitable even with an average win rate.

2) Why use an R:R Calculator?

  • Objective entries and exits.
  • Risk management before you place the trade.
  • Consistency across strategies and markets.

3) How to Calculate the Ratio

risk = entry − stop   |   reward = target − entry   |   R:R = reward ÷ risk

Example: Entry ₹1,000, Stop ₹950, Target ₹1,200 → risk ₹50, reward ₹200 → R:R 1:4.

4) Build an Excel R:R Sheet

  1. Columns: Entry, Stop, Target, Risk, Reward, R:R
  2. Risk: =A2-B2 · Reward: =C2-A2
  3. R:R: =E2/D2

5) Practical Example

Entry ₹1,500 · Stop ₹1,450 · Target ₹1,650 → Risk ₹50 · Reward ₹150 → R:R 1:3 (favorable).

6) Benefits

  • Objective evaluation (less emotion).
  • Consistent, repeatable decisions.
  • Stronger risk management.

7) Integrate R:R into Your Strategy

  • Use R:R to approve entries and exits.
  • Place realistic stops/targets before entering.
  • Compare strategies by average R:R over time.

8) Works Across Assets

Stocks, Forex, Commodities, Crypto—use the same R:R logic to keep risk in check across volatile markets.

9) Online Tool

Use this page’s calculator to quickly evaluate setups without building sheets from scratch.

10) Common Mistakes

  • Ignoring trend/news/context.
  • Unrealistic targets inflating R:R.
  • Neglecting position sizing and per-trade risk.

11) Conclusion: Why R:R Matters

The R:R ratio is a cornerstone of risk management. Combine it with a realistic win rate, consistent execution, and proper position sizing to build durable profitability.