Risk Reward Ratio Calculator

Frequently asked questions

Everything you need to know about risk reward ratios and expectancy on TheDesperateTrader.

What is a risk reward ratio?

The risk reward ratio compares how much you stand to gain on a trade to how much you stand to lose. If your target is 1.50 away from your entry and your stop is 0.50 away, your reward-to-risk ratio is 3 to 1: you are risking one unit to make three. Higher is generally better, but it must be weighed against how often you actually hit the target.

What is a good risk reward ratio?

Many traders look for at least 2 to 1, meaning the potential reward is twice the risk. At 2 to 1 you only need to win about a third of your trades to break even. The right ratio depends on your win rate: a high win rate can justify a lower ratio, and a low win rate needs a higher one.

What is the breakeven win rate?

The breakeven win rate is the percentage of trades you must win, at a given risk reward ratio, just to break even. It equals risk divided by the sum of risk and reward. At 2 to 1 it is about 33%, at 3 to 1 about 25%. Win more often than that and the strategy is profitable over time.

What is expectancy?

Expectancy is the average amount you can expect to make per dollar risked, given your ratio and win rate. Enter your win rate and the calculator shows it in R (risk units). A positive expectancy means the system makes money over many trades; a negative one loses even if individual trades win.

How do I find high reward-to-risk setups?

They usually start with a clean level and a catalyst. Our free real-time scanner flags stocks the moment they move on unusual volume, so you can find setups early, then size and score them with our calculators. No credit card required.