Risk reward calculator with breakeven win rate
A setup is only worth taking if the possible reward pays for the times it fails. Enter your entry, stop and target, and the calculator shows the risk and reward per share, the risk reward ratio and the win rate you need just to break even. No account needed.
Your result
- Risk reward ratio
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- Risk per share
- Reward per share
- Breakeven win rate
With shares entered, total dollar risk and total dollar reward are shown under the ratio.
The breakeven win rate ignores commissions and slippage, which raise the real number slightly.
How the risk reward ratio is calculated
For a long trade, risk per share is entry minus stop and reward per share is target minus entry. For a short trade the signs flip, and the calculator uses the absolute distances in both cases.
- Risk reward ratio equals reward per share divided by risk per share
- Breakeven win rate equals risk divided by the sum of risk and reward
- Total dollar risk equals risk per share multiplied by shares
The breakeven formula is the part most traders skip. A 1 to 1 trade needs to win half the time. A 1 to 2 trade needs about 33 percent. A 1 to 3 trade needs 25 percent. Below that rate, the setup loses money over time even if every individual decision feels reasonable.
A worked risk reward calculation
You plan to buy 500 shares of a stock reclaiming VWAP at $8.00. The stop goes under the reclaim candle at $7.80, and the target is the high of day at $8.60.
Risk per share is $8.00 minus $7.80, which is 20 cents. Reward per share is $8.60 minus $8.00, which is 60 cents. The risk reward ratio is 60 cents divided by 20 cents, which is 3, often written 1 to 3. The breakeven win rate is 20 cents divided by 80 cents, which is 25 percent. With 500 shares, total risk is $100 and total reward at target is $300.
Now move the target to a more realistic first resistance at $8.25. Reward drops to 25 cents, the ratio becomes 1.25 and the breakeven win rate rises to about 44 percent. Same entry, same stop, very different requirement. The calculator makes this visible before you click.
Setting targets you can actually reach
A ratio is only as good as the target behind it. Drawing a target at a level the stock has little chance of reaching makes every trade look like 1 to 4 on paper and turns into 1 to 0.8 in the account.
- Use visible levels such as the premarket high, high of day, a prior day level or a round number
- Compare the distance to target with the stock's ATR; a $1.50 target on a stock with 60 cents ATR is unlikely in one session
- Check your day trading journal for the average R you actually capture on winners, then use that as the honest target
- Remember that partial exits change the realized ratio, which the journal tracks per trade
Why win rate alone tells you nothing
A 70 percent win rate sounds good, but if the average win is $40 and the average loss is $120, the account shrinks. Expectancy combines both numbers: win rate multiplied by average win, minus loss rate multiplied by average loss. The trading journal calculates expectancy by setup, hour and scan condition from your real fills, so you can compare the breakeven rate from this calculator with what you actually achieve.
Risk reward inside DayTradingSoftware
Inside the app, entry, stop and target can be set from the chart when you open a symbol from the stock scanner. The planned stop is saved with the trade for R calculations, and the position size calculator uses the same stop to give you a share count that matches your risk per trade.
This calculator is a tool, not advice
The result is simple arithmetic based on your inputs. It does not estimate the probability of reaching any target and is not investment advice. Trading involves substantial risk of loss. Past performance and backtests do not guarantee future results.
Included on every plan
The risk and position size calculators are built into Starter, Pro and Desk alongside the scanner, alerts and journal. Starter is $49 per month or $24 per month billed yearly. See pricing.
FAQ
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What is a good risk reward ratio for day trading
There is no single good ratio. It depends on how often the setup works for you. A ratio of 1 to 1.5 can be fine with a high win rate, while 1 to 3 can still lose with a low one. Compare the breakeven rate with your journal.
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Does the calculator work for shorts
Yes. Enter a stop above the entry and a target below it. The calculator uses absolute distances.
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Why does the breakeven win rate matter more than the ratio
Because it turns the ratio into a concrete test. If the setup needs 40 percent winners and your journal shows 32 percent, the setup is losing money for you.
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Are commissions included
No. Commissions and slippage slightly raise the real breakeven rate, especially on low priced stocks with small targets.