Stock Talk with Kaliamma

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Risk–Reward Ratio Calculator

Risk–Reward Ratio Calculator

Calculate the potential risk, potential reward and Risk–Reward Ratio of your trade using Entry Price, Stop-Loss and Target Price.

Trade Details
The price at which you plan to enter the trade.
The price where you plan to exit if the trade moves against you.
The price you are targeting if the trade moves in your favour.
Enter your planned number of shares, units or contracts.
Risk–Reward Result
Risk Per Share / Unit
₹0
Reward Per Share / Unit
₹0
Risk–Reward Ratio
1 : 3.00
Potential Loss
₹1,000
Potential Profit
₹3,000
Risk from Entry
4.00%
Your Risk–Reward Ratio
1 : 3.00
You are risking ₹1 to potentially make ₹3.

Risk vs Potential Reward

Risk ₹1,000
Potential Reward ₹3,000

Trade Summary

Trade Type
Long / Buy
Entry
₹500
Stop Loss
₹480
Target
₹560
Quantity
50

What is Risk–Reward Ratio?

Risk–Reward Ratio compares the amount you are willing to risk in a trade with the potential reward you expect from that trade.

For example, if you risk ₹20 per share and your potential reward is ₹60 per share, your Risk–Reward Ratio is 1:3.

Step 1: Calculate Risk Per Share

For a Long / Buy trade:

Risk Per Share = Entry Price − Stop-Loss Price

For a Short / Sell trade:

Risk Per Share = Stop-Loss Price − Entry Price

Step 2: Calculate Potential Reward

For a Long / Buy trade:

Reward Per Share = Target Price − Entry Price

For a Short / Sell trade:

Reward Per Share = Entry Price − Target Price

Step 3: Calculate Risk–Reward Ratio

Risk–Reward Ratio = Risk Per Share ÷ Reward Per Share

The calculator displays the ratio in the easier trading format of 1 : X.

Example:

Entry Price = ₹500
Stop Loss = ₹480
Target Price = ₹560
Quantity = 50 Shares

Risk Per Share:
₹500 − ₹480 = ₹20

Reward Per Share:
₹560 − ₹500 = ₹60

Potential Loss:
₹20 × 50 = ₹1,000

Potential Profit:
₹60 × 50 = ₹3,000

Risk–Reward Ratio:
₹20 : ₹60
1 : 3

Important Risk Management Note

A higher Risk–Reward Ratio does not automatically mean that a trade is better or more likely to succeed. The ratio should be considered together with your trading strategy, probability of success, market conditions and risk management.


The potential profit shown by this calculator is based on the target price being reached. Actual results can differ because of market movement, slippage, gaps, liquidity and execution conditions.

⚠️ Disclaimer

This calculator is provided for educational and informational purposes only. It does not constitute investment advice, trading advice, or a recommendation to buy or sell any security.


Stocks and other market investments involve risk, and losses can occur. Always consider your own risk tolerance and financial situation before making any trading or investment decision.