Risk and Reward Ratio Calculator with Costs

Define the ratio without reversing it

Risk-to-reward and reward-to-risk are often written in opposite orders. This tool avoids that ambiguity by reporting the amount of modeled reward for each one unit of modeled risk. A result of 2 means the favorable amount is twice the adverse amount. It does not mean a two-to-one chance of winning.

For a long scenario, gross risk per unit is entry minus stop and gross reward per unit is target minus entry. A short scenario reverses those differences. Multiplying by quantity converts price differences into money for a linear unit-price instrument. The entered total round-trip cost is added to the adverse amount and subtracted from the favorable amount. cTrader documents the entry, stop and target relationship; this page's calculation is an independent educational model.

See the effect of costs

Assume a long entry at 100, stop at 96, target at 110, quantity of 20 underlying units and total modeled round-trip cost of 6. Gross downside is 4 × 20 = 80, becoming 86 after costs. Gross upside is 10 × 20 = 200, becoming 194 after costs. Reward per risk is 194 ÷ 86, approximately 2.25581.

Without costs the distance ratio is 10 ÷ 4 = 2.5. The lower cost-adjusted result is not an error: the same fee worsens both outcomes. In a matching short example, entry 100, stop 104 and target 90 produce the same arithmetic. Choosing short without changing the stop and target order is invalid.

Use quantity and currency consistently

The quantity means underlying units whose price is expressed in the entered quote currency. An unspecified futures contract count is not interchangeable with those units. A contract multiplier must be incorporated first, and inverse instruments require a different model. Costs must be in the same currency as the resulting price difference times quantity.

Do not include an expense twice if it is already represented by the entry or exit prices. Also distinguish a quoted target from an executable bid or ask. The calculator does not model spread dynamics, partial fills or the order book, and it does not fetch a market price.

Understand what the output cannot decide

The selected stop and target are scenarios, not guaranteed fills. A gap can exceed the intended stop, while a touched target may not fill every order. If entered costs equal or exceed the gross target amount, the tool displays a zero or negative favorable amount with an explanatory note. Moving the target farther away can mechanically increase the ratio while reducing its chance of being reached.

Evaluate outcome probabilities separately using appropriately defined evidence. Keep the actual result in the trading journal even when it falls outside the planned range. For copied positions, compare the source and follower's own entries, fills and costs instead of assuming the same planned ratio produces the same realized return.