Risk-Reward Ratio Calculator
Evaluate Trade Potential Effectively
The Risk-Reward Ratio Calculator helps traders assess the profitability potential of a trade relative to the possible loss. This tool is essential for making data-driven decisions by clearly comparing your expected gains versus the risks involved. It supports traders across equities, forex, and cryptocurrencies, especially when planning entries, exits, and defining stop-loss and take-profit levels.
Why Use the Risk-Reward Ratio Calculator?
Helps identify trades with favourable profit potential
Focuses on setups with a higher potential reward than risk.
Encourages disciplined entry and exit planning
Supports traders in creating a consistent strategy based on pre-defined criteria.
Improves capital efficiency by filtering low-quality setups
Reduces exposure to trades with poor risk-reward profiles.
Supports strategic thinking rather than emotional decisions
Promotes logical, data-backed trade evaluation over impulse decisions.
Importance and Benefits of the Risk-Reward Ratio Calculator
Assists in trade validation before placing an order
Helps evaluate whether a trade is worth taking based on risk-reward logic.
Promotes consistent and sustainable trading strategies
Encourages a systematic approach for long-term success.
Aids in maintaining a positive reward-to-risk balance
Improves chances of profitability by targeting favorable ratios.
Supports quick comparisons across multiple trade opportunities
Helps in scanning and filtering setups efficiently.
When to Use This Calculator?
During pre-trade planning or market analysis
While setting risk-reward criteria for automated systems
When adjusting stop-loss or target levels on open trades
While comparing trade opportunities across different assets
How to Use the Risk-Reward Ratio Calculator?
Follow these simple steps to calculate the average price of your stock purchases:
Enter your expected entry price
Input your stop-loss price
Add your target price
Click calculate to view your risk-reward ratio instantly
Key Terms You Should Know
Risk-Reward Ratio
A measure comparing expected profit to potential loss
Target Price
The profit-taking level set by the trader
Entry Price
The initial execution price of the trade
Stop Loss Price
A safety net to limit downside losses
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