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Risk/Reward Ratio Calculator

Computes the risk and reward per share from an entry, stop-loss and target price, the reward-to-risk ratio and the win rate at which such trades break even.

When to use

You are planning a trade with a stop and a target and want to know whether the potential gain justifies the risk, or the minimum hit rate the setup needs.

Do not use when: You need the number of shares to trade (use position-sizing) or the expected value of a bet with known odds. Informational only; not financial advice.

Formula

risk = |entry_price − stop_loss_price|; reward = |target_price − entry_price|; risk_reward_ratio = reward / risk; breakeven_win_rate_percent = 100 / (1 + risk_reward_ratio)

Planned (not realised) risk and reward, ignoring commissions, slippage and the chance that price gaps through the stop; the break-even rate assumes every trade ends at either the stop or the target. Informational mathematics only; not financial advice.

Inputs

Parameter	Type	Required	Description
`entry_price`	number	yes	Planned entry price per share or unit. Range: > 0, ≤ 1000000000
`stop_loss_price`	number	yes	Exit price if the trade goes wrong (below entry for a long, above for a short). Range: ≥ 0, ≤ 1000000000
`target_price`	number	yes	Planned profit-taking price on the opposite side of the entry from the stop. Range: ≥ 0, ≤ 1000000000

Outputs

Output	Type	Unit	Description
`risk_per_unit`	number		\|entry_price − stop_loss_price\|.
`reward_per_unit`	number		\|target_price − entry_price\|.
`risk_reward_ratio`	number		reward_per_unit / risk_per_unit.
`ratio_text`	string		The ratio written as reward : risk, e.g. '3 : 1'.
`risk_percent_of_entry`	number	%	risk_per_unit / entry_price × 100.
`reward_percent_of_entry`	number	%	reward_per_unit / entry_price × 100.
`breakeven_win_rate_percent`	number	%	100 / (1 + risk_reward_ratio): the share of winning trades at which expected profit is zero.
`direction`	string		Long when the target is above the entry, short when below.

Example

Long: entry 100, stop 95, target 115: {"entry_price":100,"stop_loss_price":95,"target_price":115} → {"risk_per_unit":5,"reward_per_unit":15,"risk_reward_ratio":3,"ratio_text":"3 : 1","risk_percent_of_entry":5,"reward_percent_of_entry":15,"breakeven_win_rate_percent":25,"direction":"Long (stop-loss below entry)"}

Short: entry 50, stop 53, target 44: {"entry_price":50,"stop_loss_price":53,"target_price":44} → {"risk_per_unit":3,"reward_per_unit":6,"risk_reward_ratio":2,"ratio_text":"2 : 1","breakeven_win_rate_percent":33.33,"direction":"Short (stop-loss above entry)"}

GET https://tttkmbb.com/api/v1/calculate/risk-reward-ratio?entry_price=100&stop_loss_price=95&target_price=115

Machine access

API: GET https://tttkmbb.com/api/v1/calculate/risk-reward-ratio (query parameters) or POST with a JSON body {"inputs": {...}}
Schema: https://tttkmbb.com/api/v1/calculators/risk-reward-ratio · Markdown: https://tttkmbb.com/investing/risk-reward-ratio.md · JSON definition: https://tttkmbb.com/investing/risk-reward-ratio.json
MCP: server https://tttkmbb.com/mcp, tool run_calculator with calculator_id="risk-reward-ratio"
OpenAPI operationId: calculate_risk_reward_ratio
Freshness: static. Authentication: none. Rate limit: fair use (see rate limits).

Sources

Wikipedia – Risk return ratio (reference)
Britannica Money – Calculating position size in trading (reference)

FAQ

Is the ratio quoted as risk:reward or reward:risk?

Traders say 'risk/reward of 1:3' meaning 1 unit risked for 3 gained; this calculator reports the reward per unit of risk (3) and writes it as '3 : 1'.

How is the break-even win rate derived?

With win rate p, expected profit per trade is p × reward − (1 − p) × risk; setting it to zero gives p = risk / (risk + reward) = 1 / (1 + ratio).

Related calculators

Position Size Calculator — Number of shares for the chosen risk.
Stock Profit Calculator — Profit at the target after commissions.
Expected Value Calculator — Expected value of an outcome with given probabilities.