Risk/Reward Ratio Calculator
Calculate the potential risk and reward of your trades in USD or INR.
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Risk/Reward Analysis
Risk Amount
Potential Loss
Reward Amount
Potential Profit
Risk per Unit
Loss per Unit
Reward per Unit
Profit per Unit
Understanding Risk/Reward Ratio
What is Risk/Reward Ratio?
The risk/reward ratio measures the potential profit of a trade against its potential loss. It helps traders evaluate whether a trade is worth taking based on the potential upside compared to the downside.
How to Calculate
Risk/Reward Ratio = (Take Profit – Entry Price) / (Entry Price – Stop Loss)
Interpreting the Ratio
- Ratio > 1: Potential reward is greater than risk (favorable)
- Ratio = 1: Potential reward equals risk (neutral)
- Ratio < 1: Potential reward is less than risk (unfavorable)
Tip: Many successful traders aim for a risk/reward ratio of at least 1:2 or higher.
Risk/Reward Ratio Calculator — Description & Usage
What Is This Tool?
The Risk/Reward Ratio Calculator helps traders and investors evaluate the potential reward of an investment relative to its risk. By calculating the ratio of potential profit to potential loss, users can make more informed decisions and manage their investment strategies effectively.
- Determine if an investment’s potential reward justifies its risk.
- Improve decision-making for trading or investing.
- Plan risk management strategies effectively.
Why Use the Risk/Reward Ratio Calculator?
Evaluate if the potential reward outweighs the investment risk.
Make informed decisions on trade entries, exits, and stop-loss levels.
How to Use This Tool (Step-by-Step)
- Enter your entry price — the price at which you plan to buy the asset.
- Enter your target price — the expected selling price to realize profit.
- Enter your stop-loss price — the price at which you will exit to prevent losses.
- Click Calculate — the tool will show the risk/reward ratio.
- Analyze results — decide if the trade meets your risk tolerance before investing.
Pro Tips for Best Results
- Aim for a risk/reward ratio greater than 1:2 to maximize returns.
- Combine with stop-loss and position sizing for better risk management.
- Review historical trades to identify optimal ratios for your strategy.
- Avoid trades where potential loss outweighs potential gain significantly.
Use the Risk/Reward Ratio Calculator to trade smartly and manage investment risks effectively!