What this risk/reward calculator does
A risk/reward calculator answers the two questions every trade comes down to: how much can I lose, and how much can I make? You give it your entry, your stop loss and your take profit, plus how big your account is and what percentage of it you're willing to risk. It returns the risk/reward ratio (your reward per unit of risk), the exact position size that keeps your loss capped at that fixed percentage, and the resulting max loss and potential reward in dollars. Because the entry auto-fills from the live market price, the trade you plan here is the trade you could place right now.
The point of the tool is to separate two things that get tangled in the heat of the moment: the shape of a trade and the size of a trade. The ratio describes the shape — is the target far enough past entry to justify the distance to the stop? The position size handles the size — whatever the coin's price, a stop-out costs the same slice of your account. Get both right and a losing streak is survivable instead of account-ending.
How to use it
- Pick your coin. The entry price auto-fills with the live market price from the ticker.
- Choose Long or Short. For a long your stop sits below entry and your target above; for a short it's the reverse, and the formula flips automatically.
- Set your stop loss and take profit at the levels your chart actually justifies — a structure break for the stop, a resistance or support for the target.
- Enter your account size and risk per trade (1% is a common, conservative default).
- Read your R:R, position size, max loss and potential reward, all updating live.
The exact formulas
The calculator uses the standard fixed-fractional position-sizing maths:
The clever part is the link between risk amount and risk per unit. By dividing the cash you'll accept losing by the per-coin distance to your stop, the position size is set so that hitting the stop loses exactly your risk amount — no more, no less. Move your stop further from entry and the position shrinks; tuck it closer and the position grows, but the dollar risk stays pinned to your chosen percentage.
Worked example
Take the calculator's defaults: a long with entry at $100, a stop loss at $95, a take profit at $115, a $10,000 account and 1% risk per trade. Risk per unit = 100 − 95 = $5, and reward per unit = 115 − 100 = $15, so the ratio is 15 ÷ 5 = 1 : 3.00. Your risk amount is 10,000 × 1% = $100, which buys a position of 100 ÷ 5 = 20 coins — a notional of 20 × 100 = $2,000. If the stop hits you lose $100 (exactly 1% of the account); if the target hits you make 20 × 15 = $300. So you're risking $100 to make $300: even with a win rate of just one trade in three, this setup breaks even, and anything above that is profit.
When and why traders use it
Disciplined traders run this calculation before every entry, not after. It's the gate that decides whether a setup is worth taking at all: if a chart only offers a 1:1 target, many traders skip it, because they'd need to be right more than half the time just to break even after fees. It also normalises size across very different coins — a $3 altcoin and a $60,000 BTC position can carry the identical $100 of risk once the tool sets the quantity for you. And over a series of trades, fixing risk at a small percentage is what lets a strategy survive the inevitable losing runs long enough for its edge to play out.
Common mistakes
- Sizing by gut instead of by stop distance. Picking a round position size and then placing a stop wherever leaves your dollar risk random. Let the stop set the size, not the other way round.
- Widening the stop to "give the trade room." Moving the stop further without re-sizing quietly multiplies your real risk. Re-run the numbers any time you move a level.
- Chasing huge ratios with unrealistic targets. A 1:8 setup is meaningless if price almost never travels that far. The ratio only counts alongside a realistic probability of reaching the target.
- Forgetting fees. This tool shows clean risk and reward. Entry and exit fees shave a little off the reward and add a little to the loss, so very tight ratios erode faster than they look.
From calculator to exchange
The position size here is exchange-agnostic: it's a quantity of coins and a notional value you can drop straight into an order ticket, whether you trade spot or set it as the size of a leveraged position. Leverage doesn't change any of the figures above — it only determines how much margin the same notional needs — so a 20-coin, $2,000 position is the same trade at 1× or 10×, just with different collateral posted. Where the real outcome can drift from the plan is fills: a thin book can slip your stop past its level or miss your target on a fast wick. Trading on a venue with deep liquidity and tight spreads keeps your realised risk and reward closest to the clean numbers this calculator shows.