Risk and position
Risk/Reward Ratio Calculator
Use this risk reward ratio calculator to make the planned downside and upside explicit before entry, while remembering that a ratio does not estimate the probability of reaching either level.
How the calculator works
risk = |entry − stop|
reward = |target − entry|
R:R = reward ÷ risk
Risk is the distance from entry to stop; reward is the distance from entry to target. Their relationship gives the risk/reward ratio, while the theoretical break-even win rate assumes consistent outcomes and excludes costs.
Fees, funding, spread, slippage, contract specifications and venue rules can change the realised result. Recheck those details before placing an order.
Inputs to check before calculating
Inputs
- Trade direction and planned entry price.
- Stop-loss price.
- Target price.
- Fees and execution assumptions for a practical review.
- Enter values from the instrument and account you are evaluating.
- Run the calculation and check its units and assumptions.
- Compare the estimate with the venue contract, fees and risk rules.
Result: A planning estimate based only on the entered assumptions, not a trade recommendation.
Frequently asked questions
Does a higher reward-to-risk ratio make a setup more likely to win?
No. It changes the payoff relationship, not the probability. Win rate, execution and costs must be evaluated separately.
Does the calculator place or recommend a trade?
No. It performs a planning calculation from the values you enter. It does not connect to an account, execute an order or provide personalised advice.
Calculator results are estimates for planning and education. Verify contract specifications, fees and rules with your broker or exchange.
Updated: · Midas Team
