Tools / Risk & Reward
Does this trade even make sense?
The reward-to-risk ratio your entry, stop, and target actually imply, and whether they can be that trade at all.
FormulaRatio = (Target − Entry) ÷ (Entry − Stop)
The formula above is exactly what this calculator runs, in full view. Never trust a number blindly, verify it: check it against your own broker's or prop firm's figures before you rely on it. You are responsible for every value you enter here; the result is for reference and educational purposes only, never financial advice, and Traderista accepts no responsibility for the financial decisions you make from it.
Below your entry: where the trade is wrong.
Above your entry: where you take profit.
Per unit means one ounce, one barrel, one unit of the base currency. Multiply by your position size for the amount actually at stake. Prices are yours to enter; Traderista never fetches, stores, or shows a market price.
These thresholds are based on widely-accepted prop-trading community norms. They are not investment advice.
Same calculator, three outcomes
Reading the calculator in four steps
Pick Buy or Sell. This decides which side of your entry the stop and target are allowed to sit on.
Set your entry. Where you plan to open the position.
Set your stop. Below entry on a Buy, above entry on a Sell: where the idea is proven wrong, not a round number.
Set your target, then read the ratio. The panel above shows the ratio, both distances, and the win rate you'd need just to break even.
Ratio vs. the win rate you need to break even
| R:R ratio | Min. win rate | What it means |
|---|---|---|
| 1 : 1 | 50.0% | Need to win more than half your trades |
| 1 : 1.5 | 40.0% | The green threshold on this calculator |
| 1 : 2 | 33.3% | Win 1 out of every 3 trades |
| 1 : 3 | 25.0% | Win 1 out of every 4 trades |
| 1 : 4 | 20.0% | Win 1 out of every 5 trades |
| 1 : 5 | 16.7% | Win 1 out of every 6 trades |
Why the ratio matters more than the win rate
The table above follows from one identity: at a ratio of 1 : R, you break even the moment your win rate reaches 1 ÷ (1 + R), before costs. That is not a claim about how traders behave. It is the same division this calculator’s “Break-even win rate” line runs on every result.
It is also why a trader who is right less often can still come out ahead of one who is right more often: winning 25% of trades at 1:3 clears the same break-even bar as winning 50% of trades at 1:1. The ratio is doing the work either way.
What keeps the ratio honest, and what breaks it
- Setting the stop where the trade idea is actually proven wrong, not at a round number.
- Keeping direction and prices consistent: a Buy's stop sits below entry, its target above.
- Reading the ratio and the break-even win rate together, never the ratio alone.
- Moving the stop after the fact to force a better-looking ratio.
- A stop or target on the wrong side of entry: this calculator refuses it by name.
- Chasing a target with no real level behind it, just to hit a round ratio.
Frequently asked questions
How is the reward-to-risk ratio calculated?
Risk is the distance from entry to stop. Reward is the distance from entry to target. The ratio is reward divided by risk, shown as 1 : R.
What counts as a good risk/reward ratio?
This calculator turns green at 1 : 1.5 and amber down to 1 : 1, a common prop-trading convention, not a guarantee. A higher ratio buys room for more losing trades while staying profitable.
Why did the calculator reject my entry, stop, and target?
Most often the stop or target is on the wrong side of the entry for the position you picked. The calculator names which field is wrong and which direction to move it, rather than showing a ratio for a trade that can't happen.
Does Traderista store the prices I type in?
No. The calculation runs entirely in your browser. Traderista never fetches, stores, or transmits the prices you enter.
How do I turn “per unit” into a real dollar amount?
Multiply the per-unit risk and reward by your position size. The Position Size Calculator below gives you that size from your account balance and risk tolerance.
Use this alongside
Traderista provides educational information and historical data only. Nothing here is financial advice. Trading involves substantial risk of loss. Past performance does not indicate future results.