Risk/reward calculator: is this trade worth it?
Here's the part that surprises most people: a trade idea can be wrong more often than it's right and still add up. Enter entry, stop and target — see the ratio, and how often it needs to work just to break even.
Enter an entry, a stop and a target.
How it works: risk = distance from entry to stop. Reward = distance from entry to target. The ratio is reward ÷ risk. The break-even win rate is the share of trades you'd need to win just to come out even: 1 ÷ (1 + ratio).
What the ratio tells you — and what it doesn't
A 2-to-1 trade risks one unit to make two. At that ratio you only need to win about one trade in three to break even. That's why many traders skip any trade under 2-to-1.
What it can't tell you is how likely the target is. A far-away target makes the ratio look great and the trade less likely to get there. Put targets at real places on the chart — like the last place price turned around — not at whatever number makes the ratio pretty. More in The risk/reward ratio, explained.
Make this a habit, not a one-off. Lesson 2 of our free email course is all about risk: the 1% rule, where the stop goes, and the 2-loss rule. Send me the free lessons →
Want the next step? We'll walk you through it.
Four free lessons by email, one every few days — each with a 10-minute exercise on a real chart.
Send Me the Free Lessons 4 short emails · No spam · Unsubscribe anytimeOr see the whole method, step by step:
See What’s Inside the Course Try everything free first. Decide when you're ready. · Open the free chart tool (works in the TradingView phone app)One chart idea a day, in plain English. Follow along: