Trading metric
Risk/Reward Ratio Calculator
Enter your entry, stop, and target to get the reward-to-risk ratio for a trade, plus the win rate you would need just to break even at that ratio, a number many people overlook.
What the risk/reward ratio is
The risk/reward ratio compares what you stand to lose on a trade with what you stand to gain. The risk is the distance from your entry to your stop, and the reward is the distance from your entry to your target. Expressed as reward divided by risk, a value of 2 means the potential gain is twice the potential loss, usually written as 2 : 1.
The most useful companion figure is the breakeven win rate, the percentage of trades you would need to win just to come out flat at a given ratio. It is 1 / (1 + reward-to-risk). At 1 : 1 you need to win 50% of the time to break even; at 2 : 1 you need only about 33%; at 3 : 1, just 25%. This is why the ratio and the win rate must always be considered together rather than in isolation.
Why the risk/reward ratio is used
Traders use the risk/reward ratio to judge whether a setup is worth taking before entering, and to keep the size of losses proportionate to the size of gains across many trades. Combined with the breakeven win rate, it frames a simple question: given how often this approach tends to win, does the payoff justify the risk?
The ratio describes a single planned trade, not a guarantee of the outcome. Price does not have to reach either the stop or the target, and how you set those levels is entirely your own decision.
What are TradingView and Pine Script?
TradingView is one of the most widely used charting and market-analysis platforms, where traders and analysts study price movement across stocks, crypto, forex, and futures on interactive charts. Pine Script is TradingView's own lightweight programming language, created so anyone can build custom tools that run directly on those charts.
People use Pine Script to build four main kinds of tools. Indicators calculate and plot values on the chart, exactly like the calculation above, but recomputed automatically on every bar. Strategies add explicit entry and exit rules and can be backtested against historical data in TradingView's Strategy Tester to see how they would have behaved. Screeners scan many symbols at once for conditions you define. Alerts notify you the moment a condition you specified occurs, so you do not have to watch the screen.
The value is precision and automation. Instead of eyeballing a chart, you describe exactly what you want measured, visualized, or notified about, and TradingView runs it consistently across any market and timeframe. That is why traders, analysts, and developers write Pine Script: it turns a manual charting idea into a repeatable tool. These tools are for tracking, visualizing, and testing market ideas; they do not tell you what to trade, and that decision always remains yours.
Writing that code by hand means learning Pine Script's syntax, its type system, and the exact names of hundreds of built-in functions. It is a real programming language, and small mistakes stop a script from compiling in the Pine Editor.
Turn this into Pine Script
Here you worked out the ratio for one planned trade. In a coded strategy you would usually want the stop and target set automatically for every entry, so that risk stays consistent. Pine Script handles the exits with strategy.exit using a stop and a limit, but defining where those levels sit, based on your own logic, is the part that takes real code.
//@version=6
strategy("Risk/Reward Example", overlay=true)
entryPrice = strategy.position_avg_price
stopPrice = entryPrice * 0.98 // 2% risk
target = entryPrice + (entryPrice - stopPrice) * 2 // 2 : 1 reward-to-risk
strategy.exit("Exit", stop=stopPrice, limit=target)PineScripter is an AI built specifically for Pine Script. You describe what you want in plain English and it writes TradingView-ready v5 or v6 code. Because it is specialized on the Pine Script language and its exact function signatures, it tends to produce code that compiles far more reliably than general-purpose models like ChatGPT, which often invent functions that do not exist in Pine Script.
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PineScripter is an AI developer tool that helps you write Pine Script code. It is not a financial advisor and will never offer financial, investment, or trading advice. Everything on this page, including the calculator and the explanations, is provided purely for educational and informational purposes. Any decision about how to interpret an indicator or trade a market is entirely your own. See our full disclaimer for more.