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Stocks and trading

Risk-reward calculator

Compare how far a stop-loss and a target are from your entry, and the win rate that breaks even.

Direction
per share
per share
per share
shares
% of trades

Optional. A figure you type, only to work out an average result. Leave it empty to skip.

Brokerage and taxes

Counts STT, brokerage, exchange fees, GST and stamp duty from the broker’s published plan.

Broker plan

Charges use the rates this broker publishes for an ordinary account, on NSE. Your own plan may differ.

Kind of trade

The target is 2 times as far from the entry as the stop-loss, a ratio of 1 : 2. Wins and losses cancel out at a win rate of 33.3%, before charges.

Risk-reward ratio
1 : 2The target is 2 times as far from the entry as the stop-loss.
Risk if stopped out
₹500₹5.00 a share, before charges
Reward if target hits
₹1,000₹10.00 a share, before charges

Break-even win rate

Before chargesShare of trades that must reach the target for wins and losses to cancel out
33.3%
After chargesCharges make the target smaller and the loss bigger
35.8%
Charges if stopped out
₹37.07
Charges if target hits
₹38.63

Charges worked out for delivery trading on NSE with Zerodha’s published plan.

Average result per trade at 40%

Before charges
+₹100.00
After charges
+₹62.31

This uses the win rate you typed and assumes every trade ends at the stop-loss or the target. It says nothing about what win rate is typical or what yours will be.

What this assumes

  • Every trade ends exactly at the stop-loss or exactly at the target, with no partial exits.
  • Each trade is treated as separate from the one before it.
  • The ratio describes distances you chose. It does not say how likely the target is to be reached.
  • This describes the figures you entered. It does not predict what comes next.

What next

  • Position size

    Work out how many shares a trade involves if you decide in advance how much you can afford to lose.

  • Brokerage

    See every charge on a trade, from brokerage to taxes, and what you actually keep.

  • Margin

    See the exposure, the leverage and the price move that would use up your margin on a leveraged position.

  • Average price

    Find the weighted average price of several buys, and what it takes to reach a target average.

How it works

Risk is the rupee loss if the price reaches your stop-loss. Reward is the rupee gain if it reaches your target. The ratio compares the two distances, and the break-even win rate follows from it.

Ratio = Reward / Risk. Break-even win rate = Risk / (Risk + Reward)

A worked example

Buy 100 shares at 100 with a stop-loss at 95 and a target at 110. The risk is ₹500 and the reward is ₹1,000, a ratio of 1 : 2. If wins and losses are the only outcomes, you break even when 33.3% of trades reach the target. If you assume 40 percent of trades win, the average result per trade is 0.4 x ₹1,000 - 0.6 x ₹500 = +₹100.00. The 40 percent is a figure you type, not a claim about any strategy.

With charges included, a stopped-out trade costs a little more and a winning trade pays a little less, so the break-even win rate rises. The page works out the charges for both outcomes separately.

What it leaves out

  • How likely the target is to be reached before the stop-loss. The ratio is only about distances.
  • Trades that end somewhere between the stop-loss and the target, or are exited in parts.
  • Slippage and gaps, where an order fills away from the price you set.
  • Tax on profits.

Questions people ask

What is a good risk-reward ratio?

There is no ratio that is good on its own. A wider target needs fewer wins to break even, but a distant target is also reached less often. The page shows the win rate your ratio needs, and you decide whether that suits your own judgement.

What does break-even win rate mean?

It is the share of trades that must reach the target, with the rest hitting the stop-loss, for the total result to be zero. At a ratio of 1 : 2 that is one trade in three. Above it the average is a gain, below it the average is a loss, on these numbers.

Where does the win rate come from?

From you. This site holds no figures on how often any approach works, so the win rate is an assumption you type to see the average result. Try several values to see how sensitive the result is.

Why does including charges change the break-even win rate?

Charges are paid whether the trade wins or loses. They shrink the reward a little and enlarge the loss a little, so a larger share of trades must win to cancel out. On a small trade with a tight stop the effect can be large.

Why is the expected value labelled as an average?

It is the result you would get on average over many trades if your assumed win rate held and every trade ended at the stop-loss or the target. Any single trade ends in one of two outcomes, never in the average.

Where the numbers come from