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Risk to reward ratio calculator
See how much you stand to gain for every rupee you risk, and how often such a trade must work for the maths to come out even.
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How to use it
Type your entry price, stop-loss and target. Add the quantity if you want rupee totals. A stop below the entry means a long (buy) trade; a stop above it means a short.
The formula
Risk = |entry − stop|. Reward = |target − entry|. Reward to risk = reward ÷ risk. A trade bought at ₹100 with a stop at ₹95 and a target at ₹110 risks ₹5 to make ₹10: a ratio of 1 : 2.
The win rate that breaks even
If every trade has the same ratio R, you need to win 1 ÷ (1 + R) of your trades to break even before charges. At 1 : 2 that is 1 ÷ 3, or 33.3%. At 1 : 1 it is 50%. At 1 : 0.5, where you risk more than you aim to make, you must be right two times out of three.
| Reward to risk | Win rate needed |
|---|---|
| 1 : 0.5 | 66.7% |
| 1 : 1 | 50% |
| 1 : 1.5 | 40% |
| 1 : 2 | 33.3% |
| 1 : 3 | 25% |
Reading the number honestly
A high ratio on paper is easy: put the target far away. Far targets are reached less often, so the ratio and the win rate move against each other. Charges also push the break-even win rate up a little, especially for small option trades; see the brokerage calculator. The ratio describes one plan. It says nothing about whether the price will reach the target.
Questions people ask
- What is a good risk to reward ratio?
- There is no single good number. A lower ratio needs a higher win rate and a higher ratio needs fewer wins, so the ratio only means something together with how often such trades work for you.
- Is 1:2 written as risk to reward or reward to risk?
- Both styles are used. This calculator shows 1 : R, meaning you risk 1 to make R.
- Do charges change the result?
- Yes, a little. Charges add to every loss and subtract from every win, so the real break-even win rate is slightly higher than the one shown.