Break-even win rates for common risk:reward ratios
Losses count as 1R. The last column follows the cost you enter above.
| Risk:reward | Fraction | No costs | With 0.1R costs |
|---|---|---|---|
| 0.5:1 | 2/3 | 66.67% | 73.33% |
| 1:1 | 1/2 | 50.00% | 55.00% |
| 1.5:1 | 2/5 | 40.00% | 44.00% |
| 2:1 | 1/3 | 33.33% | 36.67% |
| 2.5:1 | 2/7 | 28.57% | 31.43% |
| 3:1 | 1/4 | 25.00% | 27.50% |
| 4:1 | 1/5 | 20.00% | 22.00% |
| 5:1 | 1/6 | 16.67% | 18.33% |
Where the formula comes from
Count every loss as 1R and every win as RR, and say each trade costs c in R for spread and commission. With a win rate of W, the average result per trade, your expectancy, is:
To turn costs into R, divide your total cost per trade by your risk per trade. The spread, commission and average slippage all count. Because a tight stop makes the same cost a bigger share of R, short-term traders feel costs most. Above a break-even win rate of 100%, the costs are bigger than the payoff and no win rate can make the trade pay.
A worked example, step by step
You target 2:1 trades on a currency pair with a 20 pip stop, and pay about 2 pips per round trip in spread and commission.
Costs alone add 3.33 points to the win rate you need. If your journal shows a 35% win rate, you look profitable on paper (above 33.33%) but lose money once costs are in: 0.35 × 2 - 0.65 × 1 - 0.1 = 0.70 - 0.65 - 0.10 = -0.05R per trade. Widen the stop to 40 pips with the same 2 pip cost and c falls to 0.05R, bringing break-even down to 1.05 ÷ 3 = 35.00%.
The break-even rate is the floor, not the goal. To see how much you actually make above it, run your numbers through the trade expectancy calculator. To see how long losing runs get at your win rate, use the losing streak calculator. The R-multiple calculator turns any trade into R, and the risk:reward ratio and win rate glossary pages define both inputs.
How the RB Trading Pro Journal does this for you
The RB Trading Pro Journal works out your win rate, average R, expectancy and losing streaks from your real imported trades, with fees and commissions included. It shows your real payoff next to the win rate you actually hit, so you can see at a glance how far above break-even each setup really sits.
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Frequently asked questions
What is the break-even win rate formula?
Break-even win rate = 1 ÷ (1 + RR), where RR is your average win divided by your average loss. With costs of c in R per trade it becomes (1 + c) ÷ (1 + RR). At 2:1 with no costs that is 1 ÷ 3 = 33.33%.
What win rate do I need for a 1:2 risk:reward?
You need to win more than 33.33% of your trades to profit when you risk 1 to make 2, before costs. With 0.1R of spread and commission per trade, it rises to 1.1 ÷ 3 = 36.67%.
How do I convert spread and commission into R?
Divide your cost per trade by your risk per trade. If you risk $200 and pay $20 in spread and commission, your cost is 20 ÷ 200 = 0.1R. A tighter stop makes the same cost a bigger share of R, which is why short-term traders feel costs most.
Is a higher risk:reward always better?
No. A higher risk:reward lowers the win rate you need, but targets further away get hit less often. What counts is whether your real win rate beats the break-even win rate for your real payoff, which shows up as positive expectancy.
What happens if I win exactly at the break-even rate?
Your expectancy is zero, so over many trades the wins and losses cancel out and you finish flat, less any costs you left out. You need a buffer above break-even to cover bad runs and the error in your own estimate of your win rate.