CHECK THE TRADE-OFF
Risk/Reward & Break-Even Win Rate Calculator
Compare a planned target with a planned stop and find the win rate needed to break even under those assumptions.
Your result
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How to use this calculator
Adjust the inputs to your own scenario, then review the result alongside the assumptions below. The $ symbol is a currency label; the tool does not convert exchange rates.
Worked example
A $100 entry, $98 stop, and $106 target give $2 of risk and $6 of reward before costs: a 3:1 reward/risk ratio and a 25% break-even win rate.
The formula
Net risk per share = stop distance + costs. Net reward per share = target distance − costs. Reward/risk = net reward ÷ net risk. Break-even win rate = net risk ÷ (net risk + net reward).
What the result means
A larger target makes the planned ratio look better, but it does not establish how often the target will be reached. Compare the planned ratio with realized average wins and losses in a backtest.
Assumptions and limitations
Assumes every losing trade reaches the stop and every winning trade reaches the target, with the same estimated cost. Partial exits, breakeven trades, time exits, gaps, and variable fills change realized results. A nonpositive net reward cannot break even in this binary model.
Common questions
Does 3:1 mean a profitable strategy?
No. Profitability also depends on the realized win rate, costs, and actual trade outcomes.
Why does the break-even win rate rise with costs?
Costs increase a losing trade’s loss and reduce a winning trade’s profit.
Put your trading rules to the test
Explore supported daily stock rules, then review historical trades, drawdowns, and the report’s assumptions.
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Open calculator →Educational calculations, not a forecast or personalized investment advice. Your inputs are used locally for the calculation and are not submitted by this tool.
Risk/reward ratio versus actual results
With an entry at $100, a stop at $98 and a target at $106, planned risk is $2 per share and reward is $6: a 3:1 reward-to-risk ratio, or 1:3 when written risk first. The break-even win rate is 25% before costs if every trade ends at that stop or target.
If round-trip costs are $0.20 per share, net risk becomes $2.20 and net reward $5.80. The ratio falls to about 2.64:1 and the break-even win rate rises to 27.5%. Those figures do not tell you how often a target will be reached.
Use the position size calculator to translate per-share risk into a planned position, then backtest supported daily stock rules to inspect realized trades and drawdowns.