Risk Reward Calculator
Calculate trading risk to reward ratio.
Risk-Reward Calculator
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Risk-Reward Ratio
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Potential Profit—
Potential Loss—
R:R Ratio—
Plan trades with disciplined risk-reward setups before entry. This calculator helps preserve capital by sizing positions and validating trade quality.
What risk-reward tells you
Risk-reward ratio compares potential loss to potential gain. Better ratios improve expectancy when paired with sound win rates and risk management.
Risk-reward formula
Risk-Reward Ratio = (Entry - Stop Loss) : (Target - Entry) for long trades
Example 1:2 means risking 1 unit to potentially make 2 units.
Essential risk checks
- Maximum risk per trade (for example 1% of capital)
- Position size from stop-loss distance
- Liquidity and slippage
- Correlation with existing positions
How to use this calculator
- Enter entry, stop-loss, and target prices
- Compute risk per share and reward per share
- Review ratio and expected R multiple
- Adjust position size to cap max loss
- Take trade only if setup matches your plan
Risk-reward example
Scenario: Long entry at Rs 500, stop-loss Rs 480, target Rs 560.
Inputs
- Risk per share: Rs 20
- Reward per share: Rs 60
Calculation
- Ratio = 20:60 = 1:3
- If 200 shares traded, max risk = Rs 4,000; potential reward = Rs 12,000
Result: Setup offers a 1:3 risk-reward profile.
Frequently Asked Questions
It depends on your strategy win rate and execution quality.
Yes, if win rate is too low or stop-loss discipline breaks.
Many traders limit risk to 0.5% to 2% of total capital per trade.
Yes, the same framework works across asset classes with volatility adjustments.