Tools
Risk/reward calculator
Risk and reward, in this tool, are distances you type: from entry to stop, and from entry to target. The ratio describes the plan. It does not say the target is likely, or that a ratio above any threshold is a good trade.
How the calculation works
Risk per unit is the absolute gap between entry and stop. Reward per unit is the absolute gap between entry and target. The ratio is reward divided by risk when risk is not zero. The tool also reports cash risk if you supply a quantity. It does not combine this with probabilities.
Assumptions
- The stop and the target are both reachable at those prices, which is a hope, not a fact.
- The position is closed at one of those two prices and not somewhere else.
- No costs are deducted.
A worked example
Entry 100, stop 95, target 110. Risk is 5, reward is 10, ratio is 2. A trader who hits the stop half the time and the target half the time is not “ahead” once costs and the times they hit neither are included. The calculator will not do that false comfort for you.
Limitations
There is no house view on a minimum ratio. Publishing one would pretend that payoff shape replaces analysis. It does not.
Change one input at a time if a result looks surprising. The arithmetic is only as careful as the numbers you type, and it does not know your broker’s contract size.
The ratio describes the distances you typed. It is not a grade.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- Investor.gov — checked 2026-10-13