Two numbers that go together
Your win rate is the percentage of your trades that end as winners. Your risk-reward ratio (often written R:R) compares your average win with your average loss: a ratio of 2 means your wins are, on average, twice the size of your losses. Neither number alone tells you whether you're profitable.
The minimum win rate for each ratio
Your break-even win rate, before fees, is 1 ÷ (1 + ratio):
| Average win / average loss | Minimum win rate to break even |
|---|---|
| 0.5 | 66.7% |
| 1 | 50% |
| 1.5 | 40% |
| 2 | 33.3% |
| 3 | 25% |
A trader who wins 70% of the time but whose wins are half the size of their losses is barely profitable before fees. Conversely, winning 40% of the time with wins twice the size of losses leaves a comfortable margin.
Calculating your expectancy per trade
Expectancy measures what a trade earns on average: (win rate × average win) − (loss rate × average loss). Expressed in R (units of risk), it lets you compare strategies and periods even if your position size changed.
Example: 45% winners averaging 1.8 R, 55% losers at 1 R. Expectancy = 0.45 × 1.8 − 0.55 × 1 = +0.26 R per trade. Over 100 trades at 1% risk, that's roughly +26% before fees and before compounding.
The free diagnostic calculates your win rate, your average win and loss, and your results by instrument, hour and day, so you see where your expectancy is positive and where it isn't.
Common traps
- Aiming for a theoretical ratio ("I only take 1:3 trades") without checking the ratio you actually get: early exits often drag it down. See cutting winners too early.
- Judging on too few trades: below about thirty, luck dominates.
- Forgetting fees: spreads and commissions reduce expectancy, especially when scalping.
FAQ
What is a good win rate in trading?
There isn't one in absolute terms: it depends on your ratio between average win and average loss. With a ratio of 2, 33.3% is enough to break even before fees; with a ratio of 1, you need more than 50%.
How do I calculate my break-even win rate?
Minimum win rate = 1 ÷ (1 + average win / average loss). With a ratio of 1.5, you need to win at least 40% of your trades, before fees.
What is expectancy in trading?
The average gain you can expect per trade: win rate × average win − loss rate × average loss. A positive expectancy is the condition for a strategy to be profitable over time.