Risk Reward Calculator: Entry, Stop and Target

This risk reward calculator compares your planned loss at a stop with your planned gain at a target. Enter Entry Price, Stop Loss Price and Target Price. It shows price distances, percentages of entry and the share of winning trades needed to cover losses before costs. That breakeven rate is not your chance of winning. Its “Trade Quality,” “Implication” and “Profit Factor” cards use assumptions, not your trading history.

Read the ratio in the order printed

This tool prints risk first and reward second. A displayed 1:3 means the target distance is three times the stop distance. Some sites use “reward/risk” to mean the numeric quotient, while others use “risk/reward” for its reciprocal. Writing the labels alongside a comparison avoids reversing the conclusion.

For a long trade (buy first), planned risk = entry − stop and planned reward = target − entry. For a short trade (sell first), planned risk = stop − entry and planned reward = entry − target. The reward-to-risk multiple is reward ÷ risk. Positive distances require the stop and target to be on the appropriate sides.

A larger target makes the ratio larger arithmetically. It does not make that target attainable. CME’s trade-plan material puts the ratio alongside account exposure, leverage and loss limits. Those are separate decisions from drawing a distant target.

Risk reward ratio formula with a Nifty example

The formula has two parts. Risk is the distance from entry to stop. Reward is the distance from entry to target. The ratio is reward divided by risk, and this tool prints it as 1:reward, so a result of 1:3 means three units of planned reward for each unit of planned risk.

Here is a made-up long trade on Nifty futures. Entry is 24,000, the stop is 23,900 and the target is 24,300. Risk is 24,000 − 23,900 = 100 points. Reward is 24,300 − 24,000 = 300 points. The ratio is 300 ÷ 100 = 3, shown as 1:3. In rupees, one Nifty lot of 65 carries a planned risk of 100 × 65 = 6,500 and a planned reward of 300 × 65 = 19,500, before costs.

A short trade flips the order. Entry 24,000, stop 24,100 and target 23,700 give the same 100 and 300 points, so the same 1:3 ratio. The calculator infers a short when the stop is above the entry, so enter the prices in that order. These are not recommendations, only arithmetic on invented levels. Nifty's lot size of 65 comes from the NSE lot size file for the Nov-26 contracts, and the lot size is revised from time to time.

The three price fields and direction

The visible form has no Buy/Sell selector. A stop above entry makes it infer a short position; otherwise it treats the plan as long. Check that the target agrees with that direction. The form also has no quantity, account-balance, fee, pip-value or volatility field.

Use prices for the same instrument throughout. For an option-premium plan, all three entries should be premium prices. Combining an index entry with an option-premium stop gives a distance with no useful money meaning. A spread with several option positions needs combined-position analysis beyond this single-price form.

Worked long example and the actual output cards

Illustrative example: Entry Price ₹500, Stop Loss Price ₹480 and Target Price ₹560 for a fictional share trade. These are assumed levels and do not recommend a stock or target.

Risk % is not the fraction of your account at risk. To obtain a money amount, multiply a compatible per-unit price loss by actual quantity and the relevant contract value multiplier. Account risk then divides that money amount by account capital. This form does not ask you for those inputs. See risk per trade for the account-risk question.

A short uses reversed price directions

A second illustrative example keeps entry at ₹500 but puts the stop at ₹520 and target at ₹440. Risk is ₹520 − ₹500 = ₹20 per share; reward is ₹500 − ₹440 = ₹60. The displayed ratio and breakeven rate match the long example because the distances match.

The same distance does not imply the same economic risks across instruments. A short share position and a purchased option have different obligations. The ratio only compares the price changes you supplied. It does not calculate margin or a liquidation level.

Risk reward for option buyers and sellers

Option buyers have a natural stop: the premium paid is the most that can be lost. Many buyers still set a smaller premium stop. For a bought option, enter all three fields as premium prices, for example entry 100, stop 80 and target 140. The ratio is 40 ÷ 20, or 1:2.

Option sellers collect the premium up front and face a loss that can be many times larger. A plan to sell at 100 with a stop at 180 and a target of 20 has a risk of 80 and a reward of 80. A seller who aims for a high chance of keeping the premium often accepts a stretched risk like this, and the breakeven win rate for a 1:1 plan is 50%. Selling options needs margin, and this tool does not calculate it. Read option buying vs option selling before using any ratio on a short option.

A multi-leg strategy has a payoff made of several parts, so a single entry, stop and target do not describe it. Use the maximum profit and maximum loss of the whole position instead.

What breakeven win rate assumes

Cost-free breakeven win rate = risk ÷ (risk + reward) × 100. It assumes every winning trade reaches the stated reward and every losing trade incurs the stated risk. For the example, 20 ÷ (20 + 60) × 100 = 25%. It estimates a threshold for that assumed outcome pattern, rather than your chance of winning.

A hypothetical group of four trades with one ₹60 winner and three ₹20 losers totals ₹60 − 3 × ₹20 = ₹0 before costs. The realised win rate in that example is one in four. Actual results can differ through partial exits, larger losses, trades closed without a gain or loss, and changing size.

Costs raise the threshold. If, purely as an illustration, each trade costs ₹2 per share in total, the example net win is ₹60 − ₹2 = ₹58 and net loss is ₹20 + ₹2 = ₹22. Breakeven becomes 22 ÷ (22 + 58) × 100 = 27.5%. The tool has no fee input, so this adjustment is separate.

Breakeven win rate for each risk reward ratio

If every winner earns the full reward and every loser loses the full risk, you break even before costs when the share of winners equals risk ÷ (risk + reward). This is the same as 1 ÷ (1 + reward-to-risk). The table lists common ratios.

So with a 1:2 plan you need to win about one trade in three just to cover losses, before costs. This does not say you will win one in three. It says what you would need. Your own journal tells you what you actually get.

What is a good risk reward ratio?

There is no single good ratio, because the answer depends on how often your trades reach the target. A 1:1 plan with a 60% win rate and a 1:3 plan with a 30% win rate can each make money. A 1:3 plan with a 20% win rate loses money, since 20% is below the 25% it needs. A high ratio only helps if the targets get hit often enough.

Also remember that a wider target is hit less often than a closer one on the same chart. A stop placed too close to improve the ratio gets hit by ordinary movement. Choose the stop where the trade idea is proven wrong, and the target at a level the chart gives you a reason to expect. Then read off the ratio. If the ratio is poor, that is useful information, and passing on the trade is a valid result.

To judge a ratio, combine it with your real win rate to get your expectancy (average result per trade). The expectancy page explains the calculation, and the profit factor calculator works from your recorded totals.

Why the extra cards need caution

The Profit Factor card uses an assumed 50% win rate because this form does not collect an observed win rate. In the example it shows 3. That number is a model output, not gross profits divided by gross losses from your completed trades. Use the profit factor calculator with actual recorded totals for that purpose.

Trade Quality and Implication are preset phrases selected from the ratio. They cannot certify a high-probability setup or future profit. “Wins for 10R Gain” counts full-target wins needed to reach that gross amount with no losses included. R means the planned risk unit; this card is not a forecast of how many total trades you need.

Adding costs to your risk reward

Costs make the stop loss larger and the target smaller. A trade that looks like 1:2 before costs is a bit worse after them. Here is a made-up option buying example on a Nifty option. Entry premium 100, stop 80, target 140, one lot of 65. Brokerage is assumed at 20 rupees per order, which is an illustration, and the other charges use the rates in our trading charges log: STT of 0.15% on the sell premium since 1 April 2026, NSE option charge of 0.03553% on premium turnover, SEBI fee of 10 rupees per crore, stamp duty of 0.003% on the buy side and 18% GST on brokerage, exchange and SEBI fees.

Before costs the plan is 1:2 and needs a 33.33% win rate. After costs the net win is 2,532.39 and the net loss is 1,360.12, so the breakeven becomes 1,360.12 ÷ (1,360.12 + 2,532.39) = 34.94%. The costs cost this plan about 1.6 percentage points of required win rate. Slippage (getting a worse price than planned, especially on a stop) makes it worse. This calculator has no cost field, so work these numbers on the side or use your trade log.

Position size from your risk amount

The ratio tells you nothing about how many lots to trade. Position size comes from the rupee amount you accept losing. Divide that amount by the loss per lot. With a risk limit of 6,500 rupees and a loss per lot of 6,500, you can trade one lot. With a limit of 3,000 rupees, you cannot trade even one lot of that plan, so you either find a tighter stop that still makes sense or skip it. Do not move the stop just to fit. See how to calculate position size.

Invalid prices and execution gaps

Use complete positive price entries. Blank or zero values are replaced by internal sample prices. A zero-distance stop cannot produce a meaningful reward-to-risk ratio. A target on the wrong side is flagged as an invalid setup; do not turn its other numeric cards into a valid plan.

The SEC’s investor bulletin explains that a stop price is not a guaranteed execution price and a stop-limit order can remain unexecuted. Broker-specific rules still apply in India. Your actual loss can therefore exceed the stop distance used here, especially when prices jump past the stop or few buyers and sellers are available.

Compare the original plan with the executed entry and exit after closing. A stop-loss order is an instruction with execution conditions, and a square-off requires completed offsetting trades. The calculator neither places orders nor monitors either event.

Using R multiples in a trading journal

An R multiple expresses a trade result in units of the planned risk. If you planned to risk 1,300 rupees and made 2,600, the result is +2R. If the stop was hit for 1,300, it is −1R. R multiples let you compare trades of different sizes in one list. OneTradeJournal records trades by hand, and each trade can hold the stop, target, strategy, notes, emotions and mistakes, which is what you need to work out R yourself.

Record the planned ratio before you enter and the result after you exit. Over time compare the planned ratio with what you really got. If you plan 1:3 and your average winner is only 1.5R because you exit early from fear, the journal will show that gap. That is the real value of tracking it. Then review your win rate by strategy and time of day in the reports to see where the plan holds up.

Sources

• Risk Reward Calculator form and cards (OneTradeJournal); checked 16 October 2026.
• Risk Management and Your Trade Plan (CME Group); checked 16 October 2026.
• Stop, Stop-Limit and Trailing Stop Orders (SEC Investor.gov); checked 16 October 2026.