Question 1

What is a risk/reward calculator?

Accepted Answer

A risk/reward calculator compares the amount you can lose on a trade (from entry to stop loss) against the amount you can gain (from entry to target). It also tells you the minimum win rate required to break even.

Question 2

How is the ratio calculated?

Accepted Answer

Risk = Entry − Stop loss (for longs). Reward = Target − Entry. R:R = Reward ÷ Risk. Break-even win rate = 1 ÷ (1 + R:R). Bizzlytics calculates all three instantly.

Question 3

Why does risk/reward matter?

Accepted Answer

A trader with a 40% win rate and 1:3 R:R makes money. A trader with a 60% win rate and 1:1 R:R also makes money — but a 60% win rate with 1:0.5 R:R goes broke. R:R is what turns win rate into edge.

Question 4

Example calculation

Accepted Answer

Entry $100, stop $95, target $115. Risk = $5. Reward = $15. R:R = 1:3. Break-even win rate = 1/(1+3) = 25%. If you can win more than 25% of trades at this R:R, you have a profitable system.

Question 5

Common mistakes to avoid

Accepted Answer

1) Moving the stop away from entry (worsens R:R). 2) Taking profits early "just in case" — destroys the R:R math. 3) Assuming a 1:3 R:R alone makes a system profitable without back-testing win rate. 4) Ignoring fees for tight-R:R scalps.

Question 6

Related tools

Accepted Answer

Combine with the Position Size Calculator to convert risk into shares, the Expectancy Calculator to project long-term profit, and the Kelly Criterion Calculator for optimal bet sizing.

Risk/Reward Calculator

The formula

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