Trade planning

Risk–Reward Ratio Calculator

Compare the planned reward with the planned risk using your entry, stop-loss and target. Quantity is optional if you also want the rupee outcome.

Trade parameters

Planned entry price

₹

Planned stop-loss

₹

For a long equity trade, the stop must be below the entry.

Planned target

₹

For this long-equity calculator, the target must be above the entry.

Quantity — optional

Add whole shares to see planned rupee risk and potential reward.

Payoff structure

Long equity

Reward : Risk

3.00: 1

This ratio describes the planned payoff structure — not the probability of reaching the target.

Risk / share

₹50.00

Reward / share

₹150.00

Breakeven win rate*

25.0%

At 100 shares

Planned risk at stop

₹5,000

Potential reward at target

₹15,000

Price map

₹950STOP

₹1,000ENTRY

₹1,150TARGET

₹50.00 risk · 5.0% below entry₹150.00 reward · 15.0% above entry

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VSC principle: A stop should come from invalidation. A target should come from market structure. The ratio is the consequence — not something you manufacture by moving either level.

How the calculation works

Define the trade

Set the entry, the stop where the setup is invalidated, and a realistic target based on the trade plan.

Measure both distances

Entry − stop is the planned risk per share. Target − entry is the potential reward per share.

Compare the payoff

Reward per share ÷ risk per share gives the Reward : Risk ratio. The ratio does not estimate the chance of success.

Core formula: Reward : Risk = (Target − Entry) ÷ (Entry − Stop)

How to read the result

Reward : Risk: How many units of planned reward you are pursuing per unit of planned risk. A 3:1 ratio means the target is three stop-distances away — it says nothing about how likely either level is.
Breakeven win rate: The win rate at which this payoff breaks even, assuming wins and losses land at the planned levels. Below it the process loses money over many trades; above it, it gains.
Compare it with your actual win rate: The ratio is only useful next to evidence. If your measured win rate sits below the breakeven figure, the payoff is not large enough for how often the setup works.
A better ratio is not a better trade: Moving the target further away improves the ratio on screen and lowers the chance of reaching it. The stop should come from invalidation and the target from structure.