Three prices make the ratio everyone quotes: how far it is from your entry down to your stop, against how far it is from your entry up to your target. This page prints that one first, then prints the one that matters more, which is the same trade after the round trip has been paid for. The cost of getting in and out is paid whether the trade works or not, so it makes the losing side bigger and the winning side smaller, and the ratio you actually get is worse than the ratio you were quoted by exactly that much. Type the shares as well and the cost stops being a number on a statement and becomes cents a share, which is where it belongs. Alongside the two ratios you get the win rate that breaks you even on each, the dollars at stake either way, and three figures this page is built around: the most this trade can pay in costs and still hold the ratio you asked for, the fewest shares it takes to hold it, and the take profit that would earn it back. No account, no email gate, no prices fetched: every figure here was typed by you.
The trade, and what it costs to do
Pick the one you are actually doing: it only decides which way the two distances run.
2 means 1 : 2. Nothing here recommends a ratio: this is the one you are holding the trade to.
How big the position is. This is what turns a flat fee into cents a share.
Commission plus fees plus whatever the spread costs you, to get in and to get out, one figure. Leave it empty and the page does the ordinary three price sum. Put it in and every figure below is rebuilt with the cost on both sides of the trade.
Ratio after the round trip cost
Ratio before any cost
Win rate you have to beat, after cost
Win rate before cost
Money lost if it stops out, cost included
Money kept if it reaches the target
Most round trip cost that still leaves 1 : 2
Least shares that still hold 1 : 2
Take profit that would net 1 : 2
The middle column is the whole point of the cost box: the same fee spread over more shares is worth less a share, and it is cents a share that bites into a ratio. Every row here is the same trade with a different bill attached to it.
How the ratio is worked out
Every risk reward ratio is one division. Take the distance from your entry to the price where you admit you were wrong, take the distance from your entry to the price where you take the money, and divide the second by the first. A trade entered at 100.00 with a stop at 95.00 and a target at 115.00 risks 5.00 a share and stands to make 15.00 a share, and 15.00 divided by 5.00 is 3, which is written 1 : 3 and read as risking one to make three.
Risk a share = entry − stop loss (long) or stop loss − entry (short)
Reward a share = take profit − entry (long) or entry − take profit (short)
Risk to reward ratio = reward a share ÷ risk a share
The ratio also sets the win rate that leaves you exactly flat, and that number is the reason people look at ratios at all. If a losing trade costs you 5.00 a share and a winning one pays you 15.00, then one win pays for three losses, so you only have to win one trade in four. That is 25.0000%.
Breakeven win rate = risk a share ÷ (risk a share + reward a share)
On the example: 5.00 ÷ (5.00 + 15.00) = 5.00 ÷ 20.00 = 25.0000%
What the round trip cost does to it
Here is the part that gets left out, and it is left out on every page of this kind that was read while this one was being written. A round trip is paid for on both journeys. You pay to get in and you pay to get out whether the trade stops out at 95.00 or runs to 115.00, and the fee does not care which happened.
So the cost does not sit beside the trade, it sits inside both of its outcomes. On the losing side it is added to what you lose: 5.00 a share of price movement plus the cents a share of getting in and out. On the winning side it is taken off what you keep: 15.00 a share of price movement less the same cents. The ratio you are left with is the second of those divided by the first, and it is always smaller than the one you were quoted.
Take the same trade over 200 shares with 40.00 of round trip cost. That is 40.00 ÷ 200 = 0.2000 a share. The losing side becomes 5.00 + 0.2000 = 5.2000. The winning side becomes 15.00 − 0.2000 = 14.8000. The ratio is 14.8000 ÷ 5.2000 = 2.8461, so the trade you called a 1 : 3 is a 1 : 2.8461, and the win rate that breaks you even moves from 25.0000% to 26.0000%.
Cost a share = round trip cost ÷ shares
Risk a share with the cost in = risk a share + cost a share
Reward a share with the cost in = reward a share − cost a share
Ratio after cost = (reward a share − cost a share) ÷ (risk a share + cost a share)
Win rate after cost = (risk a share + cost a share) ÷ (risk a share + reward a share)
That last line is worth looking at twice. The cost shows up on the top of the fraction and nowhere in the bottom, because the two amounts it is added to and taken from add back up to the same 20.00 the trade always moved. What that means in practice is that every cent of cost turns into a higher win rate you have to hit, and nothing else about the trade changes to compensate. On this example, 40.00 of cost on a 200 share position is one percentage point of win rate.
In dollars, over the whole position: the price move from 100.00 to 95.00 is 1,000.00 across 200 shares, and the 40.00 of cost makes the real loss 1,040.00. The move from 100.00 to 115.00 is 3,000.00, and the same 40.00 makes the real gain 2,960.00.
The cost does not sit next to the trade, it widens the loss and narrows the gain by the same cents a share. Nothing about the prices moved: only what you keep and what you lose did.
The most this trade can pay and still hold your ratio
Turning that around gives the number that is actually useful before you place anything. Instead of asking what the cost does to the ratio, ask how much cost the ratio can absorb before it falls to the level you said you would not go below. A trade that pays 1 : 3 gross has room to spare against a 1 : 2 floor, and the question is how much room, in dollars.
The answer runs the net ratio formula backwards. You want the reward less the cost to be at least some multiple of the risk plus the cost, and solving that for the cost gives a closed form with no guessing and no trying numbers one at a time.
Most cost a share that still holds 1 : X = (reward a share − X × risk a share) ÷ (1 + X)
On the example, holding 1 : 2 from a 5.00 risk and a 15.00 reward: (15.00 − 2 × 5.00) ÷ (1 + 2) = 5.00 ÷ 3 = 1.6666 a share, and across 200 shares that is 333.32. Pay 333.32 to do this trade and it is still a 1 : 2. Pay 333.36 and it is not, and the box at the top of the page is where that number appears with your own figures in it.
There is a second threshold worth knowing, because it is the one that ends the argument: the cost that leaves you needing to win half your trades to break even, which is the same as a net ratio of exactly 1 : 1. That is simply half the difference between the reward and the risk a share, so (15.00 − 5.00) ÷ 2 = 5.00 a share, or 1,000.00 on this position. Past that point the trade is not a trade, it is a coin toss with a fee.
The least number of shares that holds it
Commission and platform fees are usually charged per trade, not per share, and that has a consequence most three price calculators cannot show because they never ask how big the position is. A flat 40.00 is 0.2000 a share on 200 shares and 2.0000 a share on 20. The ratio does not belong to the trade alone, it belongs to the trade at a size.
So the page also answers the sizing version of the same question: given the flat cost you typed, how many shares does it take before the cost thins out enough to leave the ratio you asked for standing. It is the same inequality as before with the share count as the unknown rather than the cost.
Least shares that hold 1 : X = round trip cost × (1 + X) ÷ (reward a share − X × risk a share), and then carried up to the next whole share
On the example: 40.00 × 3 ÷ (15.00 − 10.00) = 120.00 ÷ 5.00 = 24 shares. At 24 shares the cost a share is 1.6666 and the trade nets exactly 1 : 2. At 23 shares the cost a share is 1.7391 and the trade nets 1 : 1.9677, under the line. One share is the whole difference, and the box at the top prints where that line falls on your own numbers.
Read it the other way up and it is a warning about small positions. Nothing about a 20 share trade is wrong in principle, but a flat fee on a small position costs more a share, and the ratio on the same prices is genuinely worse. If a fee schedule is quoted per trade, this is what it is doing to a small account.
The take profit that would earn the ratio back
Sometimes the levels are not negotiable and the cost is fixed, and the only thing left to move is the target. That case has an answer too, and it is the one people usually work out by nudging a number until the ratio looks right.
The reward a share has to cover two things: the multiple of the risk you are asking for, and the cost on both of the trades that make up that multiple. Once the cost is a share, the required reward is a sum rather than a search.
Reward a share needed for 1 : X = X × risk a share + cost a share × (1 + X)
Take profit that delivers it = entry + that reward (long) or entry − that reward (short)
On the example, holding 1 : 2 with 0.2000 a share of cost: 2 × 5.00 + 0.2000 × 3 = 10.00 + 0.6000 = 10.60 of reward a share, so the target has to sit at 110.60 rather than 110.00. The extra 0.6000 is not a margin of safety, it is the arithmetic of the fee: one unit of it on the losing side you are covering, plus the two units of reward you are promising, three payments in total.
Long and short: one sum, two directions
A short trade is the same arithmetic with both distances running the other way, and the page does it rather than telling you to flip the numbers yourself. On a short, the risk is how far the price can rise against you before the stop, and the reward is how far it has to fall to reach the target.
Selling at 100.00 with a stop at 105.00 and a target at 90.00 risks 5.00 a share for a reward of 10.00 a share, which is 1 : 2 before any cost, and the win rate that breaks even is 33.3333%. Put 20.00 of round trip cost over 100 shares on it and the cost is 0.2000 a share: the losing side becomes 5.2000, the winning side 9.8000, and the ratio falls to 1 : 1.8846, under the 1 : 2 it appeared to be. The cost a share has the same effect in both directions, because it is not a directional cost.
Why the least share count is carried up and everything else is cut down
One rule everywhere on this site is that nothing is rounded up, and this page keeps it, with a single stated exception that exists for a reason worth reading.
The least share count is a floor to clear rather than a benefit to receive. If the arithmetic says 24 shares exactly, then 24 is the answer and anything less misses. If it says 24.4, the true answer is 25, because 24 shares is a real position that still falls short and the page would be pointing at a size that does not do what it says. So that one figure is carried up to the next whole share, and the page prints that it did.
Everything else still goes downwards. Money is shown to two decimals, prices, ratios, shares and percentages to four, and each is cut off at that point rather than rounded. Cutting the cost allowance downwards is the safe direction as well: it understates how much you can pay rather than overstating it, so a trade taken at the printed figure still clears the ratio it was supposed to clear.
What this page does not decide
The arithmetic here is a division and three rearrangements of it. The judgment around them is not on this page. It does not know and does not claim to know:
How often a trade like this wins. The breakeven win rate is a threshold your own numbers produce, not a forecast and not a probability. Nothing here knows your strike rate, your strategy or your market, and no figure on this page is an estimate of how a trade will go.
Whether the target or the stop will be reached, or in what order. No fill probability, no slippage model, no gap risk. The page takes the two prices as given and works out what they imply.
Whether the trade is worth taking. A ratio is one number about one setup. It says nothing about whether the setup was any good, and this page holds no view on the market, the instrument or the timing.
What it costs in tax. A winning trade can be a taxable gain and a losing one can be a deductible loss, and the page has no basis, no holding period and no rate to work any of that out from. The capital gains tax calculator takes a gain and a rate you type and does that sum separately.
Whether your broker's fee schedule is the one you typed. Commission, platform fees, exchange fees and the spread are all different things with different arithmetic. The box accepts one figure for the whole round trip, and it is the one you supply.
Which currency any of it is in. No exchange rate is applied anywhere, so keep one currency per run.
What this page cannot work out
Three prices, a share count and a round trip cost are the whole input. These things are outside it, with no box to put them in:
Leverage and margin. Nothing here borrows anything. A leveraged position has a different risk profile from its price distances, and the ratio on margin is not the ratio printed here. Treat every figure on this page as unlevered.
More than one exit. Scaling out at two targets, or moving a stop as the trade runs, changes both sides of the arithmetic and needs a page of its own. This one is one entry, one stop, one target.
Live prices or a live spread. There is no quote feed and no broker connection wired in. The cost is not looked up for you, and the prices are not checked against anything.
Costs that depend on the outcome. A fee that only applies on one side, or a charge that changes with the size of the fill, cannot be expressed as one round trip figure. If the two sides cost different amounts, use the total you expect to pay on the losing trade, which is the side that is already smaller.
What a series of these trades does to an account. One trade's ratio says nothing about a run of them. Nothing here compounds, and nothing here forecasts.
The same sum in a spreadsheet
Put the entry in A1, the stop in A2, the target in A3, the shares in A4, the round trip cost in A5 and the ratio you want in A6. Then:
Risk a share = =ABS(A1-A2)
Reward a share = =ABS(A3-A1)
Cost a share = =A5/A4
Ratio before cost = =reward/risk
Ratio after cost = =(reward-cost_per_share)/(risk+cost_per_share)
Win rate after cost = =(risk+cost_per_share)/(risk+reward)
Most cost a share for 1:X = =(reward-A6*risk)/(1+A6)
Least shares for 1:X = =CEILING(A5*(1+A6)/(reward-A6*risk),1)
Take profit that nets 1:X = =A1+A6*risk+cost_per_share*(1+A6)
One difference is worth knowing. A spreadsheet rounds when it displays a number but keeps the full value underneath, while this page cuts every figure down at the point shown, so on the same inputs the last decimal can differ. And the CEILING in the second to last line is doing the same job as the exception described above: without it the share count lands one short and the ratio misses the target it was supposed to reach.
The same money, other questions
Sizing and risk belong to more than one page, and the others sit beside this one. If the question is how big the position should be before the ratio ever comes into it, the position size calculator works that out from the amount you are willing to lose on one trade. If a trade has already closed and you want what it actually netted, the stock profit calculator does that from the two prices and the costs. If the same shares were bought at several prices, the cost basis calculator puts them on one line first, and the average down calculator handles the case where they were bought again lower. For a gain that has to be reported, the capital gains tax calculator takes it from there, and the options profit calculator covers contracts, where the risk and the reward do not move one for one with the price. Across a whole set of holdings rather than one trade, the portfolio rebalance calculator answers what to buy and sell, and the CAGR calculator gives the growth rate behind all of it.
Frequently asked questions
How do I calculate the risk-reward ratio?
Take the distance from your entry price to your stop loss and the distance from your entry to your take profit, then divide the second by the first. A trade entered at 100.00 with a stop at 95.00 risks 5.00 a share; with a target of 115.00 it stands to make 15.00 a share, and 15.00 divided by 5.00 is 3, written 1 : 3. If there is a cost to get in and out, subtract it a share from the reward and add it a share to the risk before dividing, which on that example with 0.2000 a share of cost turns 1 : 3 into 1 : 2.8461.
What is a good risk-reward ratio?
This page will not name one, because a ratio only means something next to the win rate a strategy actually achieves, and that number is not on this page and not in this calculator. What can be said is mechanical: the higher the ratio, the lower the win rate that breaks you even, and the two have to be looked at together. A 1 : 3 trade needs one win in four; a 1 : 1 trade needs more than one in two. The page prints the breakeven win rate for whatever ratio you typed, and leaves the judgment about whether you can hit it to you.
What is a 3 to 1 risk-reward ratio?
It is a trade where the distance to the target is three times the distance to the stop: risking 5.00 a share to make 15.00 a share, on the example used all the way down this page. Written the other way round it is 1 : 3, and both are the same statement. The win rate that breaks even on it is 25.0000%, because one winning trade at 15.00 pays for three losing trades at 5.00. With 0.2000 a share of round trip cost the same trade pays 1 : 2.8461 and needs 26.0000%.
What is the 1.2 risk-reward ratio?
It is a ratio of 1 : 1.2, where the target is a fifth further from the entry than the stop is: 5.00 risked against 6.00 wanted, on the same distance scale. It needs a win rate of 45.4545% to break even, which is high, and that is exactly why this kind of ratio is sensitive to cost. On 5.00 of risk and 6.00 of reward, the most this trade can pay a share and still hold 1 : 1.2 is nothing at all, because it is already sitting on the line; the same trade aimed at 1 : 1 has 0.5000 a share of room, which is what the cost box above works out with your own figures.
Does commission change my risk-reward ratio?
Yes, and in both directions at once. A round trip is paid whether the trade wins or loses, so it makes the losing outcome bigger and the winning outcome smaller, and the ratio is the second divided by the first. On a 5.00 risk and a 15.00 reward with 0.2000 a share of cost, the risk becomes 5.2000, the reward becomes 14.8000, and the ratio goes from 3.0000 to 2.8461. The breakeven win rate moves from 25.0000% to 26.0000%. A three price calculator that never asks what the trade costs cannot show any of that, because it has no cost to put anywhere.
How do you quickly measure risk to reward before entering a trade?
Type the three prices you already have in your head, the entry, the stop and the target, and read the top box: that is the ratio, and the win rate below it is what the trade demands of you. It takes as long as typing three numbers. What is worth adding before you commit is the fourth figure, the round trip cost, because a ratio measured on prices alone is measured on a trade you cannot actually do. With shares and a cost typed in, the same three prices give the ratio you will really be paid.
What is a breakeven win rate, and what does the cost do to it?
It is the share of trades that have to win for the wins to pay for the losses exactly, with nothing left over. It is risk divided by risk plus reward: 5.00 over 20.00 on the example, which is 25.0000%. Cost raises it, and only it, because the cents a share are added to the risk and taken from the reward, and those two amounts still add up to the same total the trade always moved. So 0.2000 a share of cost takes the breakeven win rate from 25.0000% to 26.0000% while leaving everything else about the trade alone.
Can I use this on a short trade, or on forex, futures and crypto?
Short trades yes: pick short at the top and both distances run the other way, with the stop above the entry and the target below it. Other markets are a question of what you type rather than what the page does. The arithmetic knows nothing about the instrument, so a forex pair, a futures contract or a coin uses the same three prices and the same cost, as long as one thing is kept in mind: the round trip cost has to be in the same unit as the prices, and on contracts where a tick is worth more than a point, the cost that belongs in the box is the cost in price, per unit, not the fee per contract.
This page is a calculator, not investment or tax advice. It applies no strategy, no win rate and no probability: the prices, the size and the cost are yours, and the ratios and win rates are worked out from those alone. Nothing here forecasts how a trade will go or how often trades like it win. There are no live prices and no broker connection. Contact: contact@stockavg.com