Win rate vs risk-reward: the break-even math
November 4, 2026
Two traders can have the same account and opposite win rates and both be profitable. What matters is how win rate and the size of wins and losses combine.
The terms
- Win rate is the share of trades that make money.
- Risk-reward ratio (here, the payoff ratio) is your average win divided by your average loss. If you win $200 on average and lose $100, the ratio is 2.
The break-even win rate
If your average win is R times your average loss, you break even when:
win rate = 1 / (1 + R)
| Average win / average loss | Break-even win rate | |---|---| | 0.5 | 66.7% | | 1 | 50% | | 2 | 33.3% | | 3 | 25% |
This ignores fees, which move the break-even point up. Real numbers need fees included.
A worked example
Win rate 40%, average win $300, average loss $150.
Expectancy per trade = 0.40 x $300 - 0.60 x $150 = $120 - $90 = +$30.
The same trader with a 40% win rate but an average win of only $150 has an expectancy of 0.40 x $150 - 0.60 x $150 = -$30. Same win rate, opposite result.
What to do with this
- Look at both numbers together. Win rate alone says little. See profit factor and expectancy explained.
- Check them by setup. One setup may win often with small wins, another rarely with large ones. Combining them hides both.
- Watch the trend, not one week. Use at least 30 to 50 trades per setup before concluding anything.
- Include fees. For frequent small trades, fees can be a large part of gross profit.
OptiqJournal shows win rate, average win and loss, payoff ratio, profit factor and expectancy on the dashboard, and breaks them down by setup. Import your trades to see your own break-even point.
Educational. Statistics describe past trades and do not predict future results.