- Risk-reward ratio
- 1 : 2
- Risk per share
- ₹15.00 (3%)
- Reward per share
- ₹30.00 (6%)
- Break-even win rate
- 33.33%
| Ratio | Target price | Break-even win rate |
|---|---|---|
| 1 : 1 | ₹515 | 50% |
| 1 : 2 | ₹530 | 33.33% |
| 1 : 3 | ₹545 | 25% |
Calculations run in your browser and nothing is saved. Educational tool, not investment advice. Save levels as Telegram or email alerts
What does this risk reward calculator do?
A risk reward ratio calculator compares what a trade can gain with what it can lose. Risk is the gap between entry and stop loss, reward is the gap between target and entry, and the ratio is reward ÷ risk. It also shows the break-even win rate, 1 ÷ (1 + ratio), and the prices that sit at 1R, 2R and 3R.
How is the risk reward ratio calculated?
The risk reward ratio divides the planned reward by the planned risk. Risk is the distance from entry to stop loss and reward is the distance from entry to target, both measured as positive rupee gaps per share. A ratio of 2 is written 1:2 and means the target is twice as far from entry as the stop.
Ratio (R) = |Target − Entry| ÷ |Entry − Stop loss|For a long trade the stop must be below entry and the target above it; for a short trade the reverse. The calculator rejects inputs that break this.Risk % = Risk ÷ Entry × 100 Reward % = Reward ÷ Entry × 100- Choose long (buy) or short (sell).
- Enter the entry, stop-loss and target prices you plan to use.
- Read the ratio, the break-even win rate and the 1R, 2R and 3R price levels.
- If the ratio is below your minimum, look for a better entry or a different trade rather than moving the stop.
What win rate do you need to break even?
The break-even win rate is the share of trades that must win for wins and losses to cancel out, ignoring costs. It equals 1 ÷ (1 + R). The higher the ratio, the fewer trades need to win: at 1:1 you need half of them, at 1:2 about one in three, at 1:3 one in four.
Break-even win rate = 1 ÷ (1 + R)Brokerage, taxes and slippage push the real break-even point slightly higher.| Risk : reward | R | Break-even win rate |
|---|---|---|
| 1:0.5 | 0.5 | 66.7% |
| 1:1 | 1 | 50.0% |
| 1:1.5 | 1.5 | 40.0% |
| 1:2 | 2 | 33.3% |
| 1:2.5 | 2.5 | 28.6% |
| 1:3 | 3 | 25.0% |
| 1:4 | 4 | 20.0% |
How does it work for long and short trades?
The maths is the same in both directions; only the order of prices flips. In a long trade the stop sits below entry and the target above it. In a short trade the stop sits above entry and the target below it. The calculator also projects 1R, 2R and 3R targets by adding or subtracting multiples of the risk from entry.
What is a good risk reward ratio?
Many demand-supply traders treat 1:2 as the minimum: the target must be at least twice the entry-to-stop gap. The reason is arithmetic. Every method has losing streaks, and a 1:2 structure lets the account stay ahead even when fewer than half the trades work, while a 1:1 structure needs more than half to win just to stand still.
What are the limits of the risk reward ratio?
A ratio describes a plan, not a probability. A distant target makes the ratio look attractive, but it may also be less likely to be reached, so the ratio only means something alongside a realistic target and an honest view of your win rate. The calculator also assumes your stop is filled at the stop price, which gaps and fast markets do not guarantee.
- Target placement matters more than the number: a target beyond an opposing supply zone inflates the ratio on paper.
- Costs reduce small rewards most: on a ₹6 reward, brokerage and taxes are a bigger share than on a ₹60 reward.
- Moving the stop changes the trade: widening it after entry lowers the ratio you originally accepted.
Frequently asked questions
What is a good risk reward ratio for trading?
A widely used minimum is 1:2, meaning the target is at least twice as far from entry as the stop loss. At 1:2 the break-even win rate is about 33.3% before costs, which leaves room for losing streaks. Higher ratios need fewer winners but usually mean more distant targets, so judge the ratio together with where the next opposing zone sits.
How do you calculate the break-even win rate?
Divide 1 by one plus the ratio: break-even win rate = 1 ÷ (1 + R). At 1:1 it is 50%, at 1:2 it is 33.3%, at 1:3 it is 25%. This ignores brokerage, taxes and slippage, so the true break-even rate is slightly higher. If your realistic win rate is below the break-even figure, the setup loses money over many trades.
Risk reward ratio kaise calculate kare?
Entry aur stop loss ka gap risk hai, aur target aur entry ka gap reward. Ratio = reward ÷ risk. Jaise entry ₹500, stop loss ₹480, target ₹560: risk ₹20, reward ₹60, ratio 3 yaani 1:3. Break-even ke liye 1 ÷ (1 + 3) = 25% trades jeetne chahiye. Bahut se traders 1:2 se kam ratio wala trade nahi lete.
Is risk reward ratio written as 1:2 or 2:1?
Both conventions exist. This calculator writes risk first, so 1:2 means risking ₹1 to make ₹2, and the single number R = 2 is reward divided by risk. Some platforms write the same trade as 2:1 reward-to-risk. Check which order a source uses before comparing numbers, because 1:2 and 2:1 can describe the same trade.
Turn the numbers into alerts
Save your entry, stop loss and target in StockNotify and get a Telegram or email alert when price reaches each level.
Educational calculator only. Results depend entirely on the numbers you enter and are not investment advice or a recommendation to trade. StockNotify is not a SEBI-registered investment adviser or research analyst.
