Risk/Reward Calculator
Essential metrics to analyze and optimize your trading performance.
Risk-Reward Ratio (RR)
Risk-Reward ratio compares your potential reward to your potential loss. A 1:3 ratio means you risk ₹1 to potentially make ₹3.
Formula: Potential Reward / Potential RiskHow to calculate this metric
Follow these four steps to get an accurate risk-reward ratio before placing any trade.
RR Ratio = Potential Reward ÷ Potential Risk- 1
Identify your entry price — The exact price at which you will open the position (buy for long, sell for short).
- 2
Set your stop-loss — The price where you exit if the trade moves against you. Long: Risk = Entry − Stop Loss. Short: Risk = Stop Loss − Entry.
- 3
Set your take-profit — The price where you exit with a gain. Long: Reward = Take Profit − Entry. Short: Reward = Entry − Take Profit.
- 4
Divide reward by risk — e.g. reward ₹15, risk ₹5 → RR = 1 : 3. Multiply both by position size to get total ₹ figures.
Break-even win rate = 1 ÷ (1 + RR Ratio) × 100What is a good about this metric?
A higher ratio means you need to win fewer trades to stay profitable. The break-even win rate tells you how often you must be right just to break even.
1 : 0.5 or less
Avoid
Win rate needed: 67%+
1 : 1
Minimum acceptable
Win rate needed: 50%
1 : 2
Good — industry standard
Win rate needed: 33%
1 : 3 or more
Excellent
Win rate needed: 25%
A 1:2 ratio is widely used as a baseline. It means even if you lose 2 out of 3 trades, you still break even. Most professional traders target 1:2 to 1:3.
Common metric of this mistakes
A high ratio on paper means nothing if you fall into these traps.
Moving the stop-loss after entry
Widening a stop-loss once a trade is open changes the actual ratio dramatically. Lock in your levels before entry and honor them.
Ignoring win rate entirely
RR ratio and win rate work together. A 1:3 ratio with a 10% win rate still loses money. Always pair the two when assessing strategy viability.
Forcing unrealistic take-profit targets
Setting a take-profit far beyond key resistance just to get a 1:3 ratio is wishful thinking. Your TP must be grounded in market structure.
Not accounting for fees and slippage
Brokerage commissions, STT, and slippage eat into both profit and loss. Always calculate your net figures, not gross, especially on small-margin trades.
Calculating ratio without considering position size
A great ratio on 1 unit means little if your position size is outsized. Always check total ₹ at risk against your overall portfolio — typically 1–2% per trade.