Win rate versus R:R
You can have more losing trades than winning ones and still grow the account — if the wins are bigger than the losses.
Win rate versus R:R — what it is?
Win rate is the share of winning trades. On its own it says nothing: a system with 90% winners can easily be a losing one.
Only the pairing of win rate with the risk-to-reward ratio works. At an R:R of 1:3 the system stays in profit even if only a quarter of the trades work out.
Hence the practical conclusion: work on the ratio, not on the share of winners. The share hits a ceiling; the ratio almost never does.
- 30% and 1:3 — out of 10 trades, 3 at +3R and 7 at −1R = +2R. The account grows
- 50% and 1:1 — 5 at +1R and 5 at −1R = 0. Exactly zero, and with costs a minus
- 70% and 1:0.5 — 7 at +0.5R and 3 at −1R = +0.5R. The most winners of all, the smallest result
- 90% and 1:0.2 — 9 at +0.2R and 1 at −1R = +0.8R. One loss eats five winning trades
- Takeaway — The share of winning trades means nothing without the profit-to-loss ratio
Win rate versus R:R — how it is built?
The breakeven threshold is simple to compute: 1 ÷ (1 + R:R). At 1:2 that is about 33%, at 1:3 it is 25%. Compare your real win rate against that threshold, not against somebody else's numbers.
| R:R | Breakeven threshold | With a margin for costs |
|---|---|---|
| 1:1 | 50% | 55% |
| 1:2 | 33% | 38% |
| 1:3 | 25% | 30% |
| 1:4 | 20% | 25% |
| 1:5 | 17% | 22% |
The threshold is calculated as 1 ÷ (1 + R:R) — the point where the account neither grows nor falls. The second column adds a margin: spread, commission and swap eat part of every trade, so you have to aim above the mathematical threshold.
Win rate versus R:R — common mistakes
Taking pride in a high win rate with an R:R worse than 1:1.
Cutting profit short so that more trades close green.
Comparing your win rate with someone else's without accounting for the ratio.
Treating a low win rate as a sign of a bad system.
Related to
Glossary
- win rate
- the share of profitable trades. On its own it says nothing about the result without the R:R.
- risk-to-reward ratio
- the distance to the take divided by the distance to the stop.
- breakeven
- moving the stop to the entry price, after which the trade can no longer end in a loss.
- high
- the highest price of the period.
- short
- selling in expectation of a fall. You sell what you do not own and buy it back cheaper.
- close
- the last price of the period. Considered the most important of the four: breakouts are confirmed by the close.