1. Pick direction (Long/Short), then set Entry, Stop, Target. The tool computes risk/reward per share and the R:R ratio.
2. Either enter Shares directly, or switch on Position sizing to size from account risk (e.g., risk 1–2% of equity per trade).
3. Optionally add Fees/Slippage to see breakeven price and net P/L impact.
4. Use Win Rate % to estimate Expectancy (average P/L per trade) for your plan.

Risk–reward ratio compares potential profit to potential loss from your stop—simple but powerful for decision making.

Many traders size positions by risking a small, fixed % of account equity (commonly ~1–2% per trade). This helps stay solvent through losing streaks and is widely taught in risk-management primers.

The calculator’s sizing mode divides your risk budget by the per-share risk (entry vs stop) and optionally rounds to a lot size.

“R” (or R-multiple) equals reward ÷ risk; it’s a clean way to compare setups and is used in expectancy thinking popularized by Van Tharp.

Expectancy (per trade) ≈ Win% × Avg Win − (1 − Win%) × Avg Loss. We apply your win-rate and the net P/L figures to estimate expectancy.

The breakeven win rate depends on R:R. With reward-to-risk = R, the minimum win rate to break even is 1 / (1 + R). The tool shows this so you can judge whether your historical win-rate is sufficient.

• Actual fills, gaps, and fees can differ from assumptions—stress test with wider stops and higher slippage.
• R:R doesn’t predict which trade will win; it helps compare setups and plan sizing. Pair with process and risk controls.
• Consider using a trade journal to record win rate, average win/loss, and R-multiple distribution; expectancy improves when those metrics improve.

Education only—no financial advice.