Risk Reward Calculator

How the Risk Reward Calculator works

Calculates the risk/reward ratio of a planned trade from entry, stop and target, plus a position size based on the maximum dollar loss you accept, to filter out trades with too little upside.

What you enter

• Entry price (USD), prefilled with live BTC
• Stop price (USD), defaults to entry − 5% if left empty
• Target price (USD), defaults to entry + 15% if left empty
• Maximum acceptable loss (USD), default 500

What it shows

• Stop distance (%) and target move (%)
• Risk/reward ratio shown as 1:X (green at ≥ 2, yellow at ≥ 1)
• Suggested position size (USD)
• Maximum loss and potential profit (USD)
• Warnings when the ratio is below 1:2 or the target is on the stop's side of entry

How to use it

1. Enter your entry price, or keep the live BTC price.
2. Enter your stop; below entry means a long, above entry a short.
3. Enter your target on the opposite side of entry.
4. Set the maximum acceptable loss in USD, then read the 1:X ratio and suggested size.

Formula

Risk % = |entry − stop| / entry × 100; reward % = |target − entry| / entry × 100; R:R = reward % / risk %; position = max loss / (risk % / 100); profit = position × reward % / 100; breakeven win rate = 1 / (1 + R:R).

Worked example

Entry 100,000, stop 95,000, target 115,000, max loss 500 USD. Risk = 5%, reward = 15%, R:R = 3, shown as 1:3.00. Position = 500 / 0.05 = 10,000 USD. Potential profit = 10,000 × 0.15 = 1,500 USD. Breakeven win rate = 1 / (1 + 3) = 25%.

How to read the result

• A higher R:R lowers the breakeven win rate (2:1 needs about 33.3%).
• A good ratio with an unrealistic target is not a good trade.
• The suggested size caps the loss only if the stop fills exactly.

Limits and cautions

• Fees, slippage and funding are excluded.
• Early exits or moving the stop change the realized R:R.
• It does not estimate the odds of hitting the target.

Common questions

What is a good risk/reward ratio?

Many traders look for at least 1:2, but it depends on your win rate: expectancy is positive when win rate × R exceeds (1 − win rate).

How is the risk/reward ratio calculated?

Divide the entry-to-target distance by the entry-to-stop distance: entry 100, stop 95, target 115 give 15 / 5 = 3, or 1:3.

Can I plan a short with this calculator?

Yes. Put the stop above entry and the target below it. A target on the stop's side is flagged as invalid.