Risk-Reward Calculator
रिस्क रिवॉर्ड कैलकुलेटर
Turns an entry, a stop and a target into the reward-to-risk ratio and — the number that actually matters — how often you must be right for the trade to break even.
Free · no sign-up · by Rohit Singh (Mr. Chartist) · Updated 2026-08-25
Enter an entry, a stop and a target. The stop and target must both differ from the entry — a trade with no defined invalidation has no risk to measure, and one with no target has nothing to measure it against.
Reward-to-risk compares what a trade pays when it works against what it costs when it does not. Entry, stop and target are the only three inputs: the distance from entry to stop is the risk, the distance from entry to target is the reward, and the ratio between them is the number people quote.
On its own that ratio is close to useless. Knowing a setup is "1 : 3" tells you nothing you can act on until you convert it into the question that decides whether the trade is worth taking: how often does this have to work for me to end up ahead? That figure — the break-even win rate — falls straight out of the same two distances, and it is the number this calculator leads with.
The arithmetic is unforgiving in a useful way. At 1 : 3 you break even being right 25% of the time, so you can be wrong three times out of four and still not lose money. At 1 : 1 you need 50%, before costs. At 1 : 0.5 you need 67% — a hit rate very few methods sustain, which is why trades where the target is nearer than the stop tend to lose money slowly even when they feel like they are working.
The formula
Risk = |Entry − Stop| Reward = |Target − Entry|
Reward-to-risk = Reward ÷ Risk
Break-even win rate = Risk ÷ (Risk + Reward) × 100- Entry
- The price you plan to enter at — the trigger price when the entry is conditional, not the current market price.
- Stop
- The price that proves the setup wrong. Taken from structure: a pattern's invalidation level, not a round percentage.
- Target
- The first objective, not the most optimistic one. Use the measured move the pattern itself implies.
- Break-even win rate
- The share of trades that must reach target, at this ratio, for the strategy to make nothing. Below it you lose; above it you gain.
A worked example, from a real published setup
Take the Alkem Laboratories setup published in ChartBook 280: entry on a daily close above ₹5,600, stop below ₹5,390 at the neckline, first target ₹5,850.
- 1Measure the risk₹5,600 − ₹5,390 = ₹210 per share. That is what being wrong costs.
- 2Measure the reward to the FIRST target₹5,850 − ₹5,600 = ₹250. Use the first target, not the ₹6,300 extension — the nearest objective is the one most likely to be reached.
- 3Divide₹250 ÷ ₹210 = 1.19, so roughly 1 : 1.19.
- 4Convert to a break-even hit rate210 ÷ (210 + 250) = 45.7%. The trade must reach its first target about 46% of the time simply to break even.
1 : 1.19 to the first target, needing a ~46% hit rate to break even. Measured to the ₹6,300 objective instead, the same trade is 1 : 3.33 and breaks even at 23% — which is exactly why the target you measure to has to be stated, not assumed.
How to read the answer
- Always compute the ratio to the FIRST target. Quoting the furthest extension flatters every setup and quietly assumes you will hold through the pullbacks in between, which most people do not.
- Break-even is before costs. Brokerage, STT, exchange charges and slippage all sit on top, so treat the real hurdle as a few percentage points above the figure shown.
- Compare the break-even rate against your OWN recorded hit rate, not an aspiration. If your journal says you reach the first target 40% of the time, a setup that needs 46% is a losing trade however good the chart looks.
- A high ratio is not automatically better. Ratios get large mostly by placing the target far away, and distant targets are reached less often — the ratio and the hit rate move against each other, which is the whole trade-off.
- Reward-to-risk decides whether to take the trade; position sizing decides what it costs when it fails. They are separate questions and a good answer to one does not rescue a bad answer to the other.
Where the stop actually comes from
Both distances should come off the chart, not off preference. The stop is the pattern's stated invalidation — a close below the neckline on a double bottom, a return inside the channel on a descending-channel breakout. The target is the pattern's measured move — the base depth projected from the neckline, the range height projected from the breakout. Every pattern page on this site publishes both. Take the two numbers from there, and the ratio is a description of the setup rather than of your hopes for it.
Frequently asked questions
Anything at or above 1 : 2 is generally considered workable, because it breaks even at a 33% hit rate and leaves room to be wrong more often than right. But no ratio is 'good' independently of how often the setup actually reaches its target — a 1 : 5 setup that works one time in ten is a losing trade.
Divide the distance from entry to target by the distance from entry to stop. Entry ₹5,600, stop ₹5,390, target ₹5,850 gives a risk of ₹210 and a reward of ₹250, so ₹250 ÷ ₹210 = 1 : 1.19.
The percentage of trades that must reach target for the strategy to make exactly nothing. It is Risk ÷ (Risk + Reward). At 1 : 1 it is 50%, at 1 : 2 it is 33%, at 1 : 3 it is 25%. Below that rate you lose money at this ratio; above it you make money.
The first. It is the objective most likely to be reached, and measuring to the furthest extension inflates the ratio while assuming a holding discipline most traders do not have. Published setups often list several targets — state which one your ratio refers to.
No. It sets the break-even hit rate at 25%, nothing more. If the setup reaches its first target less than a quarter of the time, 1 : 3 still loses money. The ratio is one half of the equation and your actual hit rate is the other.
Yes. Direction is read from your inputs — a stop above the entry is a short, so the target must sit below it. If the stop and target end up on the same side of the entry the calculator says so, because that is not a trade with two outcomes.
They answer different questions and you need both. Reward-to-risk decides whether a trade is worth taking; position sizing decides how much being wrong costs. A 1 : 4 setup sized carelessly can still do serious damage to an account.
Written By
Rohit Singh
Mr. Chartist
With 14+ years of experience in Indian financial markets, Rohit Singh (Mr. Chartist) is a SEBI Registered Research Analyst, Amazon #1 bestselling author, and the founder of Investology — a premium trading ecosystem trusted by a 1.5 Lakh+ strong community across India.
This tool performs arithmetic on figures you enter and applies general risk-management conventions. It is educational: it does not recommend any security, direction or price, and it cannot account for your circumstances. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance or assure returns. Markets carry risk — read all related documents carefully before investing.