Risk to Reward Calculator
Put in an entry, a stop loss and a target. You get the risk-reward ratio, the win rate you need to break even, and — because charges are part of every trade — what is left after brokerage and taxes.
Other calculators
Same approach, different question.
How the numbers are worked out
Six lines of arithmetic, and nothing hidden behind the result.
The formulas
- Risk per share
- Entry price − Stop loss
- Reward per share
- Target price − Entry price
- Amount at risk
- Risk per share × Quantity
- Amount you stand to make
- Reward per share × Quantity
- Risk to reward ratio
- 1 : (Reward per share ÷ Risk per share)
- Break-even win rate
- Risk ÷ (Risk + Reward)
On a short trade the stop sits above your entry and the target below it. Read each subtraction as a distance and the formulas are unchanged.
The example above, step by step
- 1Buying 500 shares at ₹100.00 with a stop at ₹95.00 puts ₹5.00 a share at risk, or ₹2,500.00 across the position.
- 2The target at ₹115.00 sits ₹15.00 above the entry, so the trade stands to make ₹7,500.00 before costs.
- 3Reward per share divided by risk per share is 1 : 3.00. Risk divided by risk plus reward puts the break-even win rate at 25.0%.
- 4Zerodha intraday charges work out to roughly ₹57.96 if the target fills and ₹51.54 if the stop does. That leaves ₹7,442.04 against ₹2,551.54 — a net 1 : 2.92, needing 25.5% of trades to win.
Why charges change the answer
A ratio that ignores costs describes a trade nobody actually places.
Costs move the ratio from both ends. When the target fills they come out of the profit; when the stop is hit they are added on top of the loss. A setup that looks like 1 : 3 on a chart is worth less than that by the time it clears your account, and the gap widens the tighter your stop and target are.
That is why the trade is priced twice here. Most charges scale with turnover, and the turnover at your target is not the turnover at your stop — selling ₹57,500 of stock costs more than selling ₹47,500. Pricing the trade once and reusing that figure for both outcomes is the common shortcut, and it makes the losing side look cheaper than it is.
Every figure is an estimate built from published rate cards, last checked 10 September 2026. Your contract note can still come out different: scrip group, the number of orders your position fills in, and whether you carry it overnight all move the total.
What is priced in
- Brokerage
- Your broker’s own fee, charged on each executed order.
- Securities transaction tax
- 0.025% on the intraday sell leg, or 0.1% on both legs of a delivery trade.
- Exchange transaction charges
- A percentage of turnover set by the exchange, so NSE and BSE differ slightly.
- SEBI turnover fee
- ₹10 per crore of turnover, on both legs.
- Stamp duty
- Charged on the buy leg only, at a rate that depends on the product.
- GST
- 18% on brokerage, transaction, SEBI and DP charges — never on STT or stamp duty.
- DP charges
- A flat fee per scrip when shares leave your demat account, so delivery sells only.
What counts as a good ratio
A ratio only means something next to the win rate it demands. This is the trade-off, row by row.
| Risk : reward | Break-even win rate | In practice |
|---|---|---|
| 1 : 0.50 | 66.7% | Two wins in three, just to stay flat. |
| 1 : 1.00 | 50.0% | Better than a coin flip, consistently. |
| 1 : 1.50 | 40.0% | Two wins in five keeps you level. |
| 1 : 2.00 | 33.3% | One win in three keeps you level. |
| 1 : 2.50 | 28.6% | Two wins in seven keeps you level. |
| 1 : 3.00 | 25.0% | One win in four keeps you level. |
| 1 : 4.00 | 20.0% | One win in five keeps you level. |
| 1 : 5.00 | 16.7% | One win in six keeps you level. |
These are gross figures. Brokerage and taxes push every row a little higher, which is what the net break-even win rate in the calculator shows.
Widening a target always improves the ratio on paper, and it always lowers the odds of getting there. Going from 1 : 2 to 1 : 3 buys you an eight-point cut in the win rate you need — worth taking only if your actual hit rate falls by less than that. The honest test is to run both versions of the same idea and compare the expectancy, not the ratio.
Anything below 1 : 1 deserves a hard look. You are staking more than the trade can return, so a majority of winners is the minimum just to stay level, and one bad run erases a long stretch of small gains.
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3. Calculating Risk Reward with Charges & Brokerage
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Frequently Asked Questions
What is risk reward ratio in trading?
The risk reward ratio in trading compares your potential loss to your expected gain on a trade. It measures how much capital you are risking to achieve a specific profit target. For example, a 1 : 2 ratio means you stand to make $2 for every $1 risked, allowing a trader to remain profitable over time even with a win rate below 50%.
How to calculate risk to reward ratio?
To calculate risk to reward ratio, measure the distance from your entry price to your stop loss (Risk per share) and the distance from your entry price to your profit target (Reward per share). Divide the reward per share by the risk per share and write it as 1 : n. For instance, buying at ₹100 with a stop loss at ₹95 (₹5 risk) and a target at ₹115 (₹15 reward) gives a risk to reward ratio of 1 : 3.
How to calculate risk reward ratio in trading?
In trading, calculate the risk reward ratio using the formula: Risk = |Entry Price − Stop Loss| and Reward = |Target Price − Entry Price|. The ratio is expressed as 1 : (Reward ÷ Risk). For long positions, Risk = Entry − Stop Loss and Reward = Target − Entry. For short positions, Risk = Stop Loss − Entry and Reward = Entry − Target. Factoring in brokerage, taxes, and slippage gives your true net risk reward ratio.
How to calculate risk reward ratio in forex?
To calculate risk reward ratio in forex, measure your stop loss and take profit distances in pips or US dollars. Divide the target profit in pips by your stop loss in pips. For instance, risking 20 pips to gain 60 pips on EUR/USD yields a 20 : 60 ratio, simplified to 1 : 3. In lot sizes (standard, mini, micro), multiply pip values by lot count and include spread and commission costs for an accurate net ratio.
What is a good risk to reward ratio in trading?
A good risk to reward ratio in trading is typically 1 : 2 or 1 : 3 for swing and position trading. However, a good ratio depends on your win rate: at 1 : 2, you break even with a 33.3% win rate, whereas at 1 : 1, you need over 50%. A higher ratio provides a larger safety margin, but only if the profit target is realistic and regularly achieved.
What is the relationship between risk and reward in investing?
In investing, the relationship between risk and reward is directly proportional: higher potential returns generally require taking on higher risk, while lower-risk assets offer more modest returns. Investors balance this tradeoff by constructing diversified portfolios that match their financial goals and risk capacity.
What is the relationship between risk and reward?
The relationship between risk and reward states that potential payout increases in tandem with the level of risk accepted. In trading, maintaining a favorable risk to reward ratio ensures that your average winning trade is significantly larger than your average losing trade, enabling long-term account growth even during losing streaks.
Does this calculator include brokerage and taxes?
Yes. Pick your broker, exchange, and product, and the calculator prices brokerage, STT, exchange transaction charges, SEBI turnover fees, stamp duty, GST, and DP charges into a net profit, net loss, net risk to reward ratio, and net break-even win rate.
What does the break-even win rate tell me?
The break-even win rate is the percentage of trades you must win for a setup to end up flat over time. A 1 : 3 setup breaks even at a 25% win rate, so any win rate above 25% produces profit. It is the fastest way to sanity-check a trade setup before taking it.
Can I use it for short trades?
Yes. Choose Short and set the stop loss above your entry price and target below it. The calculator computes risk and reward distances accordingly and accounts for short intraday sell leg taxes and charges.