Risk-reward ratio and expectancy calculator
A trade is worth taking only if the reward justifies the risk and your win rate. This calculator shows the ratio, the break-even win rate and the expectancy.
How to use this calculator
- Enter your entry, stop-loss and target prices.
- Enter your win rate from your own trade log.
- Read the reward-to-risk ratio.
- Compare your win rate with the break-even win rate and check the expectancy.
Worked examples
Example 1
Entry 100, stop 95, target 112, with a 45% win rate.
You enter
| Entry price | ₹100 |
|---|---|
| Stop-loss price | ₹95 |
| Target price | ₹112 |
| Your win rate | 45% |
You get
| Risk per share | ₹5.00 |
|---|---|
| Reward per share | ₹12.00 |
| Reward : risk | 1 : 2.4 |
| Win rate needed to break even | 29.4% |
| Expectancy per trade | +0.53 R |
Example 2
A tighter target of 105 with the same win rate.
You enter
| Entry price | ₹100 |
|---|---|
| Stop-loss price | ₹95 |
| Target price | ₹105 |
| Your win rate | 45% |
You get
| Risk per share | ₹5.00 |
|---|---|
| Reward per share | ₹5.00 |
| Reward : risk | 1 : 1 |
| Win rate needed to break even | 50% |
| Expectancy per trade | -0.1 R |
How it works
A 1:2 trade only needs to win a little over a third of the time to break even. A 1:0.5 trade needs to win two times out of three.
Expectancy is the average result per trade in units of the amount you risk. Costs and slippage subtract from every trade, so a small positive expectancy on paper can turn negative in practice.
Formula
Reward : risk = |target - entry| / |entry - stop|. Break-even win rate = 1 / (1 + R). Expectancy = win rate x R - (1 - win rate).
Common questions
What is a good ratio?
There is no single number; it depends on your win rate.
Where do I get my win rate?
From a record of your own trades, not a guess.
What is R?
One unit of the amount you risk on a trade.
Calculators give estimates for learning and planning. They are not financial, tax, legal or medical advice, and results depend entirely on the numbers you enter. Check rates, limits and rules with an official source or a qualified professional before acting.