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Risk-reward and R-multiple calculator
Risk-reward = (target − entry) ÷ (entry − stop). Enter a planned trade to see its ratio and the win rate it needs to break even; add your exit to see the result in R, the unit that shows whether you kept your stop.
Risk-reward
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Break-even win rate
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Risk (1R)
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Result in R
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A good ratio only counts if you take the stop when price gets there. Get early access and score yourself on it every day.
Expectancy in R
Expectancy
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The formulas
risk-reward = |target − entry| ÷ 1R
break-even win rate = 1 ÷ (1 + reward ÷ risk)
result in R = (exit − entry) ÷ 1R (reversed for shorts)
expectancy = win% × avg win − loss% × avg loss
R is the amount you planned to lose if you were wrong. Measuring every trade in R instead of dollars makes a $300 trade and a $3,000 trade comparable, and it exposes the trades where the loss was bigger than the plan.
Worked example
You plan a long at $50.00 with a stop at $48.00 and a target at $56.00. You risk $2.00 per share to make $6.00, so the trade is 1 : 3, and a strategy of trades like it breaks even with a win rate of 25% before costs.
With 100 shares, 1R is $200. You exit at $54.50, before the target: that is +$450, or +2.25R. Now the other side. Say the stock drops to $48, you move the stop “to give it room”, and you finally sell at $46.50. That is −$350, or −1.75R. The chart didn’t cost you the extra 0.75R. The broken rule did.
Run 50 trades with a 40% win rate, an average win of 2R and an average loss of 1R and the expectancy is +0.20R a trade, about +10R in total. Let the average loss creep to 1.5R because stops get moved, and the same win rate gives −0.10R a trade. Same setups, same entries; the only change is whether the stop rule was kept.
Why track R instead of dollars
Dollars reward size and luck. R rewards the plan. A −1R loss is a trade that went exactly as your rules said it might. A −1.75R loss is a question for your journal: what happened between the stop and the exit? Pair this tool with the position size calculator so 1R is always the same share of your account, and read how to write a trading plan and how to stop overtrading.
Questions
What is an R-multiple?
An R-multiple is a trade's result divided by the risk you planned to take. If you risked $200 (1R) and made $500, the trade was +2.5R. If you lost $200, it was −1R. It lets you compare trades of different sizes.
How do I calculate risk-reward ratio?
Divide the distance from entry to target by the distance from entry to stop. A long at $50 with a stop at $48 and a target at $56 risks $2 to make $6, a 1 : 3 risk-reward ratio.
What win rate do I need to break even?
With a 1 : R risk-reward, the break-even win rate is 1 ÷ (1 + R), before costs. At 1 : 2 you need to win about 33% of trades; at 1 : 3, about 25%.
What is trading expectancy?
Expectancy is the average result per trade in R: win rate × average win minus loss rate × average loss. A positive number means the rule set made money on average over the sample; it says nothing certain about the next trade.
Why did my trade lose more than 1R?
Because the exit was worse than the stop you planned: the stop was moved, skipped, or the price gapped through it. Those trades are worth journaling, since they are usually a rule problem, not a market problem.
Educational only, not financial advice. The calculator does arithmetic on the numbers you enter; it does not know the market, your broker’s fills, or whether a trade is a good idea. Want a check on whether you kept last week’s rules? Try Rule Check.
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