Risk/Reward and Break-Even Win Rate Calculator

Start with one consistent set of units

Enter prices in the same quote units. Quantity is the number of shares or contracts; point value is how much one full price point is worth for one unit in your account currency. For an unlevered share priced in that currency, the point value is 1.

The cost field is the total cost of entering and exiting the entire position. Enter it once. Include only costs you can reasonably quantify; the calculator does not fetch a broker schedule or infer slippage.

How the two outcomes are calculated

For a long scenario, gross stop loss = (entry − stop) × quantity × point value. Gross target gain = (target − entry) × quantity × point value. For a short scenario, reverse the price differences. The tool requires the stop and target to be on the appropriate sides of entry.

Net stop loss = gross stop loss + costs. Net target profit = gross target gain − costs. Net reward/risk is net target profit divided by net stop loss. This page labels the result as reward per unit of risk, so 2 R means a target profit twice the modeled loss.

Derive the break-even target-hit rate

Let W be net target profit and L be the positive magnitude of net stop loss. If every trade ends at one of those two outcomes, the average result is p × W − (1 − p) × L. Setting that average to zero gives p = L / (W + L).

This is an arithmetic threshold. It does not tell you the probability that this target will be reached. Partial exits, time exits, gaps, and varying costs create additional outcomes and require a different model.

Work through the default example

A hypothetical long position enters at 100, stops at 95, and targets 110, with 10 units and a point value of 1. Before costs, the loss is 50 and the gain is 100. Round-trip costs of 2 make those outcomes −52 and +98.

The net reward/risk is 98 / 52 = 1.8846 R. The break-even rate is 52 / 150 = 34.6667%. Three wins and six losses in this exact model would still produce a loss of 18; a favorable ratio is not a guarantee.

Use the result to inspect the assumptions

A wider target changes the payoff but does not make that target more likely. A tighter stop changes the modeled loss but may also change how often an exit occurs. Compare the numbers with a clearly defined setup and a complete journal instead of choosing a trade from the ratio alone.

• Use the same round-trip cost convention in both outcomes.
• Check whether your instrument has a multiplier, currency conversion, or nonlinear payoff.
• Treat the modeled stop loss as conditional on the entered execution price.

When costs consume the target

If costs equal the gross target gain, the target is a zero-profit outcome and a 100% target-hit rate is needed just to avoid a loss in this model. If costs exceed the gross gain, both possible outcomes lose money and no target-hit rate can break even.

The displayed break-even exit price covers only the entered fixed cost estimate. It is not an order instruction or a prediction that a position will reach that price.

What this tool does not calculate

• Educational arithmetic, not a recommendation to enter a position.
• The model uses two exact exits and the same cost amount for either exit.
• It does not model options Greeks, margin liquidation, currency changes, or live prices.