Risk / Reward Calculator
Analyze trade viability, calculate exact risk/reward metrics, and verify win-rate expectancies before execution.
Example: Stocks Risk / Reward Setup
Suppose you have an account size of $10,000 and you wish to risk 1.0% ($100.00) on a Stock position.
You enter long at $100.00, with a Stop Loss at $95.00 ($5.00 risk) and a Target Price of $115.00 ($15.00 reward).
The computed Risk : Reward ratio is 1 : 3.00. The trade is highly recommended because it exceeds the minimum suggested ratio of 1:2.0. You only need a 25.00% win rate to break even over time trading setups like this.
Risk Management Tips
Never trade below 1:2
Ensure your potential reward is always at least double your risk. This provides a buffer, meaning a win rate under 40% keeps you in business.
Don't move stop loss
Never widen your stop loss while a trade is open. Widening stop loss invalidates your calculation math and increases emotional drawdowns.
Let winners run
Do not close profitable trades prematurely just because of anxiety. Let the price hit your predefined target to lock in favorable R:R statistics.
Position sizing matters
Even with a perfect R:R setup, risking too much capital on one trade can clear out your account. Calculate sizes dynamically based on stop width.
Follow trading plan
A trade that breaks your rules is a bad trade regardless of outcome. Build rules-based entry/exit checklist systems and review compliance.