What is a Risk/Reward Calculator?
A risk/reward calculator compares the distance from entry to stop with the distance from entry to target. It helps traders evaluate whether a planned reward reasonably compensates for the amount at risk before placing a trade.
Formula
Example calculation
Entry at $100, stop at $95 and target at $110 produces $5 risk and $10 reward per share, or a 1:2 risk/reward profile.
How to use this tool responsibly
- Calculate before entering.
- Do not move a stop only to improve the displayed ratio.
- Consider realistic fill prices.
Frequently asked questions
Is this tool free?
Yes. This tool is free to use and does not require an account.
Does this tool provide financial advice?
No. Results are educational estimates, not financial, investment, tax, or legal advice.
Are fees and slippage included?
Only when the calculator provides an input for them. Real results may differ because of spread, slippage, commissions, taxes, and execution quality.
