Risk-Reward Ratio Calculator

A risk-reward ratio calculator is a risk management tool that evaluates the potential financial loss of a trade against its potential profit. By comparing your stop-loss distance with your profit target, it helps you determine whether a trade offers a favorable risk-to-reward payoff before entering the market.

To calculate the RR ratio, find your risk per share by subtracting your stop-loss price from your entry price. Next, find your reward per share by calculating the difference between your target price and entry price. Finally, divide reward per share by risk per share. For example, risking ₹20 to make ₹50 produces a 1:2.50 risk-reward ratio.

A 1:2 risk-reward ratio means you are risking ₹1 of potential downside to capture ₹2 of potential upside. At a 1:2 ratio, your theoretical breakeven win rate is 33.33%, meaning you can maintain positive expectancy even when winning fewer than half of your trades, assuming consistent execution and accounting for trading costs.

Not necessarily. While a higher ratio requires a lower theoretical breakeven win rate, ambitious targets are reached less frequently. Successful trading risk management requires a realistic balance between a favorable risk-reward ratio, an achievable win rate, disciplined trade logging in a trading journal, and manageable drawdowns.

Yes. This calculator applies to intraday, swing, and positional trades across Indian stocks, index futures, and commodities. Intraday traders generally use tighter stop-loss and target levels, while swing traders utilize wider structural levels. The mathematical relationship between risk and reward remains identical.