Risk Reward Calculator
Calculate risk, reward, and risk-reward ratio from entry price, stop-loss price, and target price.
Last Updated: May 2026Risk Reward Formula
Example Risk Reward Calculation
Suppose the entry price is $100, the stop-loss price is $95, and the target price is $110. Risk per share is $5 and reward per share is $10.
The risk-reward ratio is 2:1. If the position size is 100 shares, total modeled risk is $500 and total modeled reward is $1,000.
- Enter entry price.
- Enter stop-loss price.
- Enter target price.
- Enter share count to estimate total risk and reward.
Risk Reward Ratio Comparison
Risk-reward ratio changes with the distance between entry, stop-loss, and target prices. This example uses a $100 entry.
| Entry | Stop-Loss | Target | Reward/Risk |
|---|---|---|---|
| $100 | $95 | $105 | 1.00:1 |
| $100 | $95 | $110 | 2.00:1 |
| $100 | $95 | $115 | 3.00:1 |
How to Interpret the Result
A higher ratio means the target is farther from entry relative to the stop-loss distance.
Risk-reward ratio does not estimate the chance of winning. It only compares price distances.
What This Calculator Does Not Include
This calculator does not model probability, win rate, slippage, liquidity, gaps, or broker execution.
A favorable ratio can still lose money if the trade has poor odds or poor execution.
How to Use This Calculator
Calculate risk, reward, and risk-reward ratio from entry price, stop-loss price, and target price.
- Enter realistic values from your own notes or a sample stock scenario.
- Compare the result with the formula section so the calculation is easy to audit.
- Use the result as an educational reference, not as a buy, sell, or hold signal.
Important Limits
Risk Reward Calculator does not predict market direction, future returns, liquidity, taxes, slippage, or personal suitability. Real results can differ because prices, fees, tax rules, and order execution may change.
Learn the Concepts Behind the Numbers
After using this calculator, use the learning checks to review whether the underlying stock terms, risk ideas, and market basics are clear.
Educational Review
Last updated: May 2026. StockCalcLab tools are built for financial education and calculation practice only. They do not provide personalized financial, tax, legal, or investment advice.
Risk Reward FAQ
What is a risk-reward ratio?
It compares the potential reward of a trade with the potential downside risk based on the entered prices.
Is a higher ratio always better?
Not always. A high ratio can still be unrealistic if the target is unlikely or the stop level is poorly chosen.
Does this calculator predict trade success?
No. It only calculates the ratio from the inputs entered.
What is a 2:1 risk-reward ratio?
A 2:1 ratio means the potential reward is twice the modeled risk, based on entry, stop-loss, and target prices.
Can a good risk-reward ratio still lose money?
Yes. A ratio only compares price distances. It does not estimate win rate, execution quality, or market probability.
How is total risk calculated?
Total risk is risk per share multiplied by the number of shares in the example.
Disclaimer: This calculator is for educational trade planning examples only and is not trading advice.