Stop-Loss & Risk/Reward
Check the stop can actually execute, then price the reward-to-risk ratio net of costs.
Trade
Standard model — flat maintenance margin rate.
Weights total 100% (must be exactly 100%)
Assumptions (all editable)
Result
E3 · Modelled Estimate
| # | Target | From entry | Closes | Net reward | R:R |
|---|
Calculation and assumptions
Educational tool, not investment advice.
A worked example
A long with a 2% stop and a 5% target, priced net of costs — and checked first for whether the stop can execute at all.
What goes in
- Side
- Long
- Entry price
- $60,000
- Stop price
- $58,800 (−2%)
- Target
- $63,000 (+5%), closing 100%
- Quantity
- 0.1 BTC at 10x
- Account equity
- $10,000
What comes out
- Reward : Risk, net
- 2.31 : 1
- Reward : Risk, gross
- 2.50 : 1
- Risk at stop
- $127.11
- Expected reward
- $293.85
- Breakeven win rate
- 30.19%
- Stop sits in front of liquidation by
- 7.50%
The order of the two checks matters. Before the ratio means anything, the stop has to be able to fire: here it sits 7.50% in front of the estimated liquidation price, so it will. If that number were negative the exchange would close the position first, the planned loss would be replaced by a liquidation, and the ratio below it would be describing a trade that cannot happen.
Gross 2.50 becomes net 2.31 because fees are charged on both outcomes. They make the loss bigger and the win smaller, so costs can never improve a ratio — only reveal that it was flattering.
A 2.31 : 1 ratio needs 30.19% of these trades to work just to break even. That is arithmetic about the numbers you typed, not a forecast: it says what this shape of trade requires, and leaves the question of whether you can actually hit that rate where it belongs, with you.
What each field means
- Entry, stop and quantity
- The stop must be on the loss-making side of entry — below for a long, above for a short. The wrong side is refused rather than absorbed, because it inverts the meaning of every number below.
- Leverage
- Only used for the liquidation check. It does not change the risk or reward amounts, which come from the prices and the size.
- Account equity
- Turns the risk figure into a share of the account. Optional — leave it out and the ratio still works.
- Take-profit targets
- One row per target, each closing a stated share of the position. The shares have to total exactly 100%, because anything less means part of the position has no exit plan and the expected reward would be fiction.
- Slippage on stop
- Applied to the stop fill, which is where slippage actually costs you. Targets are limit orders and usually fill at their price or not at all.
Common questions
What does the breakeven win rate actually tell me?
It is the hit rate at which this reward-to-risk ratio stops losing money over many trades, and nothing more. At 2.31 : 1 you need 30.19% of them to work to end up flat. It is a property of the numbers you entered, not a prediction. What your hit rate actually is only your own record can tell you.
Why is the net ratio always worse than the gross one?
Fees are paid on both outcomes. On a loss they add to what you lose; on a win they subtract from what you make. Both directions push the ratio down, which is why adding costs can never improve a ratio — only reveal that it was flattering.
What happens if my stop is behind the liquidation price?
Then it is not a stop. The exchange closes the position when the mark price reaches liquidation, which happens first, so your planned loss never gets the chance to be the loss. The tool flags this before anything else and puts the ratio aside, because the arrangement has to be fixed by lowering leverage or size, not by adjusting the target.
How do scaled exits change the reward?
Each target contributes its own reward weighted by the share of the position it closes, and the expected reward is that weighted sum. Taking half off at a near target and letting the rest run gives a lower ratio than the far target alone, and a higher one than the near target alone — which is the trade-off scaling out actually makes.
Why must the weights total exactly 100%?
Because a plan that exits 60% of the position leaves 40% with no stated exit. The expected reward would be computed on a position you have not said how to close, which makes the number meaningless. Totalling 100% forces the plan to be complete.