The formula
The breakeven win rate is the share of winning trades at which the wins exactly pay for the losses, so the expectancy is zero:
breakeven win rate = average loss ÷ (average win + average loss)
Written with the reward-to-risk ratio, the average win divided by the average loss, it is the same thing:
breakeven win rate = 1 ÷ (1 + reward-to-risk)
A worked example
An average win of 300.00 against an average loss of 150.00, which is 2 to 1:
- Breakeven win rate
- 150.00 ÷ (300.00 + 150.00) = 33.33%
- Reward to risk
- 300.00 ÷ 150.00 = 2.00 to 1
At that rate, one win in every three trades pays for the two losses: 300.00 against two of 150.00.
Common ratios
| Reward to risk | Breakeven win rate |
|---|---|
| 0.5 to 1 | 66.67% |
| 1 to 1 | 50.00% |
| 1.5 to 1 | 40.00% |
| 2 to 1 | 33.33% |
| 2.5 to 1 | 28.57% |
| 3 to 1 | 25.00% |
| 4 to 1 | 20.00% |
| 5 to 1 | 16.67% |
Reading the result
- With the same averages, a win rate above the breakeven rate gives a positive expectancy, and one below it a negative expectancy.
- A higher reward-to-risk ratio breaks even with fewer winners; a lower one needs more.
To see what a given win rate comes to per trade with these averages, use the trading expectancy calculator.
What it leaves out
- Fees. Commission shrinks the average win and grows the average loss, which raises the breakeven rate. Use averages after fees.
- Breakeven trades. They count as neither a win nor a loss here, so leave them out when you work out a win rate to compare.
- Everything but your numbers. It is plain arithmetic on what you type. It does not know your trades or the market, and it is not advice.