Trading Tool
Risk Reward Calculator
Measure trade risk, reward and risk-reward ratio.
About This Tool
Risk Reward Calculator helps you compare planned trade risk with potential reward. It is designed for trading risk and position planning and keeps the calculation simple enough to compare scenarios without confusion.
Use this calculator when you want a quick view of total risk, potential reward, risk reward ratio before making a money decision. The result updates in your browser, so you can test different assumptions without reloading the page.
How to Use This Calculator
- Enter the values that match your real situation, not just ideal numbers.
- Review the main result first, then look at the supporting figures and chart where available.
- Change one input at a time so you can see what actually moves the result.
- Compare at least two scenarios, such as conservative and optimistic assumptions.
How the Calculation Works
The calculator compares the distance from entry to stop loss with the distance from entry to target.
Formula Used
Risk Reward Ratio = Potential Reward / Potential Risk.
Input Field Explanation
Entry Price
Enter the planned trade entry price.
Stop Loss
Enter the stop loss price used to measure trade risk.
Target Price
Enter the target price used to estimate potential reward.
Quantity
Enter the number of units, shares or contracts used in the calculation.
Example Calculation
For example, risking 5 per share to target 15 per share gives a 3:1 reward-to-risk ratio.
A trade risking 5 per share to target 15 per share has a 3:1 reward-to-risk ratio. Replace the sample values with your own numbers before using the estimate for planning.
Benefits of Using This Tool
- Helps reject poor risk-reward trades.
- Keeps risk visible before entry.
- Useful for trade planning discipline.
- It helps you check risk, reward and charges before entering a trade.
Common Mistakes to Avoid
- Changing the stop loss after entry without a plan.
- Ignoring probability and focusing only on reward.
- Entering target and stop values casually.
- Do not increase quantity without checking the money at risk.
- Do not treat the estimate as a guaranteed final outcome.
Things to Consider
- A good ratio does not guarantee profit.
- Slippage can change actual exit prices.
- Use position sizing along with risk-reward.
- Trading has market risk, slippage and costs that can change the final outcome.
- Confirm important numbers with official documents or a qualified professional when needed.
Frequently Asked Questions (FAQ)
What is a good risk-reward ratio?
It depends on strategy, but many traders avoid trades where reward is too small compared with risk.
Does risk-reward predict success?
No. It only compares planned risk and reward.
Is the Risk Reward Calculator free to use?
Yes. You can use it free on The Market Side Tools without creating an account.
What does the Risk Reward Calculator calculate?
It calculates total risk, potential reward, risk reward ratio based on the values you enter.
Does this tool save my data?
Values entered into this calculator are processed in your browser for quick estimates.
How accurate is the result?
The math follows the formula, but real-world results can differ because rates, taxes, fees and timing can change.
Can I use the default values?
The default values are only examples. Replace them with your own numbers before relying on the estimate.
Can this calculator help compare scenarios?
Yes. Change one value at a time to compare different rates, amounts or time periods.
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Educational Disclaimer
The Risk Reward Calculator is for education and planning only. This tool does not provide buy, sell or hold recommendations. Always verify important numbers before taking action.