Risk Reward Ratio
Use the Risk Reward Ratio. Enter Potential profit and Potential loss for a clear result, formula explanation, and practical planning checks.
Risk Reward Ratio measurements
Enter your values, then calculate.
Result
How to calculate risk reward ratio
Risk-reward ratio compares potential profit to potential loss on a trade or investment — a common risk-management metric used before entering a position.
How the calculation works
Risk-reward ratio = Potential profit ÷ Potential loss.
Example
A trade with $600 potential profit and $200 potential loss: 600÷200 = 3, often expressed as a 3:1 ratio.
Frequently asked questions
How is Result calculated?
Result = [Potential profit] ÷ [Potential loss].
Is the Risk Reward Ratio free to use?
Yes — every calculator on Simple Calculator Tools is free, runs in your browser, and does not require an account.
Risk Reward Ratio
Risk-reward ratio = Potential profit ÷ Potential loss.
Let's understand your risk reward ratio result.
Calculate a result above and this guide will help you interpret it using this calculator's own formula and explanation.
Pro Tips for Risk Reward Ratio
- Many traders look for a minimum risk-reward ratio (often cited around 2:1 or higher) before entering a trade, though the right threshold depends on individual strategy and win rate.
- Risk-reward ratio alone doesn't determine profitability — it must be considered alongside win rate, since a favorable ratio with a very low win rate may still not be profitable overall.
Common Risk Reward Ratio Mistakes to Avoid
- Evaluating risk-reward ratio in isolation without considering win rate, since overall profitability depends on both factors together, not the ratio alone.
When to Use This Calculator
Risk-reward ratio compares potential profit to potential loss on a trade or investment — a common risk-management metric used before entering a position.