Free Calculator
Risk/Reward Calculator
Three numbers tell you whether the trade is even worth taking. Set your entry, stop, and target. We'll do the math and show you the win rate you actually need.
What R-multiple actually means
R is the ratio between what you stand to make and what you stand to lose on a trade. If your stop is $2 below your entry and your target is $6 above, your R is 3 — you risk $1 to make $3. R is the only number that lets you compare a trade in $50 stock against a trade in a $5 stock against an options play. It strips out the dollar amount and leaves the shape of the trade.
R-multiple beats win rate
New traders chase win rate. Experienced traders chase R. Here's why: at 3R, you only need to win 25% of the time to break even. At 1R, you need to win 50%. At 0.5R, you need to win 67%. The higher your R, the more your strategy can survive a bad week, a bad month, a misread setup. The math works for you instead of against you.
This is also why "I'm right 70% of the time" is not the flex traders think it is. If you take 0.3R trades, you need to be right 77% of the time just to break even. Most aren't, over a long-enough sample.
Common mistakes
- Moving the stop down. When the trade goes against you and you "give it a little more room," you've turned a 3R trade into a 1R trade without writing down a single number. Your break-even win rate jumped from 25% to 50% — and you didn't notice.
- Taking profit at 1R. Cutting winners short collapses R-multiple after the fact. A trade you sized for 3R that you exit at 1R was effectively a 1R trade. If you do this consistently, your real R-multiple is whatever you actually exit at, not what you planned.
- Targets pulled out of thin air. If the target isn't grounded in price-action structure (resistance, prior high, ATR projection), R is theater. Set the target at a price the chart actually reaches, not at the price that makes the math look good.
