Overview
Disclaimer
Read the disclaimer at the bottom of the webpage. Nothing on this page is trading advice. Please do your own research, risk:reward analysis, due-diligence, etc.
Based on your acceptable loss
All traders lose. How much you lose is based on your risk, and your risk may not be the same for every trade. This R:R Calculator is focused around how much you are willing to lose per trade. What is your acceptable loss when the trade goes against your plan?
Quickly Identify Trade Details
The idea behind this risk:reward calculator is to help you quickly identify three things.
- How many shares you should buy based on your acceptable loss?
- Where should you start looking for your risk?
- Where should you start looking for your reward?
It does all this just buy entering the price of your planned entry.
R:R Settings
$ Risk
This is the dollar amount you are willing to risk losing per trade. This is used to calculate how many shares to buy based on your entry and risk level. The default $ risk is $100.
Distance to risk = Entry * (% Risk)
# Shares = ($ Risk) / (distance to risk)
Reward
This is the default reward you would like to use to start the calculation. It is the ratio used to compute the reward stock price level based on your entry and % risk. A R:R of 1:3 (read one-for-three) means you are risking a $1 loss for a possible $3 gain. The default is "3", 1:3
Distance to risk = Entry * (% Risk)
Reward (long) = Entry + (distance to risk) * default_reward
Reward (short) = Entry - (distance to risk) * default_reward
% Risk
This is the default percent risk you would like to use to start the calculation. It is the percentage risk, from your entry, used to compute the stock price risk level.
Distance to risk = Entry * (% Risk)
Risk (long) = Entry - (distance to risk)
Risk (short) = Entry + (distance to risk)
A percent risk too low (tight risk) may cause you to be "chopped out". Whereas, too high, and you are just throwing away money.
Please Note
The above calculations are just starting points for you to do your own analysis. Don't just set your risk based on a fixed or percent distance from your entry. I usually tie my risk to a key level on the chart, but I use the R:R Calculator as a tool to quickly identify starting points for where I should be looking based on my own trading plan.
R:R Calculator
Start
Start by entering your planned entry price. Then all the data will populate based on the default values.
Text Fields
Entry Your entry price, or if multiple entries, your average entry price.
$ Risk Your dollar risk. This is the amount of money you are willing to lose if the stock goes against your plan. For each stock, depending on your analysis and risk level, you may want to adjust the $ Risk per trade.
Shares The number of shares you have (or plan to) purchase.
Risk The stock price at which you are using for your risk (cut losses) level
Reward The stock price at which you are using for your reward (take profits) level
Placeholder Values (grey text)
These values are calculated based on your default settings. Please click the "Settings" icon and set your defaults.
Entering Data
As you enter your plan into the text fields, the placeholders will update based on the new information and default values.
Disclaimer
We do not give any stock market advice nor recommendations. We are not a financial institution. We are not a financial advisor. Our application is only for the organization of user data. We do not guarantee this application will help you in any way. The data presented within this application is for information purposes only. Sean Mayes LLC and My Trading Journal are not registered as securities broker-dealers or investment advisers. No information within this application or on supporting websites is intended as security brokerage, investment, tax, accounting or legal advice, or as an offer or solicitation of an offer to buy or sell, or even endorsement, recommendation or sponsorship of any company, fund, or security.