Risk Reward Calculator

Mastering the Risk to Reward Ratio

The Risk to Reward (R:R) ratio is perhaps the single most crucial metric utilized by professional traders and institutional investors to evaluate the statistical expectancy of an investment relative to the absolute amount of risk undertaken. A highly favorable Risk to Reward ratio essentially means that the potential profit of a setup vastly outweighs the potential loss if the trade goes against you. By mathematically maintaining an asymmetric R:R ratio—such as risking one dollar to make three dollars—you effectively engineer a system that allows you to remain highly profitable over a large sample size of trades, even if your actual win rate drops well below 50%. This tool helps you visualize that exact asymmetry before you risk a single dime in the live market.

Understanding the Output

• Risk per Share: The exact monetary amount you stand to lose per share if your stop-loss is hit.
• Reward per Share: The monetary amount you stand to gain per share if your target is reached.
• R:R Ratio: A ratio of 1:2 means you are risking ₹1 to make ₹2. Traders typically aim for setups with a minimum R:R of 1:1.5 or 1:2 to ensure long-term consistency.

This calculator automatically detects whether your setup is a Long trade (buying first, expecting prices to rise) or a Short trade (selling first, expecting prices to fall) based on the entry, stop-loss, and target values you provide.