Profit Target Calculator
Calculate your take-profit price based on your entry, stop loss, and desired risk/reward ratio.
Formula
Multiply the risk distance by your desired R:R ratio and add it to entry. For a 1:3 R:R with a $2,000 risk, the target is $6,000 above entry.
Examples
- Entry = $50,000, Stop = $48,000
- Risk = $50,000 − $48,000 = $2,000
- Target = $50,000 + ($2,000 × 3) = $56,000
- Reward = $6,000 (3× the risk)
- Entry = $3,200, Stop = $3,300
- Risk = $3,300 − $3,200 = $100
- Target = $3,200 − ($100 × 2) = $3,000
- Reward = $200 (2× the risk)
- Entry = $150, Stop = $145
- Risk = $150 − $145 = $5
- Target = $150 + ($5 × 4) = $170
- Reward = $20 (4× the risk)
Key Concepts
Setting Realistic Targets
A 1:3 R:R target looks great on paper, but is it realistic? Check if there's resistance/support between your entry and target. If a major level sits in the way, consider a lower R:R with higher probability.
Partial Take Profits
Many traders take partial profits at different R:R levels — e.g., close 50% at 1:2 and let the rest run to 1:4. This locks in gains while keeping upside potential.
Trailing Stops
Instead of a fixed target, some traders use a trailing stop that moves with price. This captures more profit in trending markets but may give back gains in choppy conditions.
Multiple Targets
Consider setting 2-3 targets at different R:R levels (1:1, 1:2, 1:3) and splitting your position accordingly. This balances probability of hitting target with total reward captured.
R:R and Market Structure
The best targets align with market structure — previous highs/lows, Fibonacci levels, or volume nodes. A target at a natural resistance level has higher probability than an arbitrary R:R-based number.
Time-Based Targets
Some trades have a time component. If your thesis is based on an event (earnings, unlock, merge), you might exit at a time rather than a price, regardless of R:R.
How to Calculate Profit Targets
A profit target is derived from three inputs: your entry price, your stop loss level, and your desired risk/reward ratio. The stop loss defines how much you're willing to risk, and the R:R ratio determines the reward multiple.
For a long position, the target is above entry by (risk distance × R:R ratio). For a short, it's below entry by the same amount. This mechanical approach removes emotion from target-setting.
While R:R-based targets are a solid starting point, always cross-reference with technical levels. A 1:3 target that sits right at major resistance may be less realistic than a 1:2 target in open air.
Frequently Asked Questions
What R:R ratio should I use?
It depends on your strategy's win rate. If you win 50% of trades, a minimum 1:1.5 R:R keeps you profitable after fees. At 40% win rate, aim for 1:2 or higher.
Should I move my stop to break even?
Many traders move their stop to break even once price reaches 1:1 R:R. This makes the trade 'risk-free' but risks getting stopped out on a pullback before hitting the full target.
Can I use fractional R:R?
Absolutely. R:R of 1:1.5, 1:2.5, etc. are all valid. The important thing is that the target aligns with a realistic price level and gives positive expected value based on your win rate.