How to use it
Enter your entry, stop-loss and take-profit, and choose Long or Short. The top of the calculator shows the risk/reward ratio, the win rate you need to break even, and your net win and loss in dollars after fees. Below it are the 1:1 to 1:5 target prices for your stop.
What risk/reward means
Risk/reward compares how much you stand to make with how much you stand to lose. A 1:2 trade risks $1 to make $2: the distance to your target is twice the distance to your stop.
Risk/Reward (R) = |Take-profit − Entry| / |Entry − Stop-loss|
The win rate you need
A trade with a better ratio can afford to lose more often. The win rate where you neither make nor lose money, before fees, is:
Break-even win rate = 1 / (1 + R)
| Risk/Reward | 1:1 | 1:1.5 | 1:2 | 1:3 | 1:4 | 1:5 |
|---|---|---|---|---|---|---|
| Break-even win rate | 50% | 40% | 33% | 25% | 20% | 17% |
Example: a BTC long at $73,000
Stop-loss $71,500 risks $1,500 per coin. Take-profit $76,000 targets $3,000 per coin. That is 1:2, so you need to win more than 33% of trades like this to come out ahead before fees.
Expected value: ratio and win rate together
A far target is not better by itself: it gets hit less often. What matters is both numbers together. Measured in units of risk:
Expected result per trade = Win rate × R − (1 − Win rate)
Win 40% of 1:2 trades and you average 0.4 × 2 − 0.6 = +0.2R per trade. Win 30% of the same trades and you average −0.1R: you slowly lose money.
Fees move the break-even
Fees are paid on the way in and on the way out. They shrink every win and enlarge every loss, so your real break-even win rate is a little higher than the table shows. The calculator's net figures include taker fees on both sides.
FAQ
What is a good risk/reward ratio? There is no single number. It depends on how often your setups reach the target. Track your own win rate and use the table above to see which ratios work for you.
Does position size change the ratio? No. The ratio depends only on the three prices. Position size changes the dollar amounts. To size the trade from the amount you are willing to lose, use the position size calculator.
Does leverage change the ratio? No, but high leverage can put liquidation before your stop and ruin the plan. Check it with the liquidation price calculator.
Related tools: Position size calculator · Liquidation price calculator · Crypto Fear & Greed Index
