Required win rate
Required win rate
The minimum win rate to avoid losing money, or to hit a target.
Required win rate
40.0 %
This tool works out the minimum percentage of winning trades you need to avoid losing money, based on your average win and your average loss. The idea is simple: the larger your wins compared to your losses, the less often you need to be right. If your average win is twice your average loss, one winner out of three keeps you at breakeven · with wins and losses of equal size, you need one out of two.
The number shown is a threshold, not a target: below it, a strategy loses money over time · above it, it makes money. That makes it a handy companion for reading a trading journal or a backtest: compare your actual win rate with the rate your win/loss ratio requires, and the gap between the two tells you how much room your strategy really has. The optional expectancy field goes one step further and finds the rate needed to average a given amount per trade.
The formula
Required win rate = (target expectancy + average loss) ÷ (average win + average loss) × 100. With the target left at zero, this collapses to: average loss ÷ (average win + average loss). Example with an average win of 150 and an average loss of 100: 100 ÷ 250 = 40%. It is exactly the same as 1 ÷ (1 + win/loss ratio): only the proportion between wins and losses matters, not their absolute size.
A worked example
Take a journal where winning trades bring in 180 on average and losing trades cost 60 on average · the average win is three times the average loss. The formula reads 60 ÷ (180 + 60) = 60 ÷ 240 = 25%: one winning trade in four is enough to break even, because a single win pays back three losses. Now flip the same amounts: average win 60, average loss 180. The calculation becomes 180 ÷ 240 = 75% · it would take three winning trades out of four to hold the same balance, because each loss wipes out three wins. Same amounts, two opposite requirements: the relationship between the two decides, never their size.
The break-even threshold by win/loss ratio
Each row is computed with the formula above, average loss fixed at 1 · the last column rounds up to the next trade, since you cannot win a third of a trade.
| Average win ÷ average loss | Required win rate | Winners out of 20 trades |
|---|---|---|
| 0.5 | 66.7% | 14 |
| 1 | 50% | 10 |
| 1.5 | 40% | 8 |
| 2 | 33.3% | 7 |
| 3 | 25% | 5 |
| 4 | 20% | 4 |
| 5 | 16.7% | 4 |
What the number does not tell you
The threshold is exact for the averages you entered, and that is its limit: your averages move with every trade. On a small sample, say ten trades, a single large win or loss shifts the threshold by several points · the figure only settles once dozens of trades sit behind it. It also counts only what your amounts contain: if your average win and loss are recorded before fees and slippage, the real threshold sits slightly above the one displayed. Finally, being just above the threshold means a barely positive expectancy · it says the strategy does not lose on these numbers, not that it earns a living.
The classic mistake
The classic mistake is treating the win rate and the win/loss ratio as two independent numbers that could each be improved on its own. In practice they hang on the same decision: taking profits earlier raises the win rate and lowers the average win at the same time · the required threshold climbs along with the rate, and it happens that you win more often while making less money. Comparing your actual rate to the threshold before and after a change in how you exit trades is the only way to know whether the change actually helped.
Frequently asked questions
What win rate do I need with a 1:2 risk-reward ratio?
When the average win is twice the average loss, breakeven sits at 33.3%: one winning trade covers two losing ones. At 1:1 you need 50%, and at 1:3 just 25% is enough. This is why two strategies with very different win rates can end up with the same bottom line.
Does a high win rate guarantee a profitable strategy?
No. An 80% win rate still loses money if a single loss wipes out more than four wins, which happens when the average loss is far larger than the average win. A win rate means nothing on its own: it always has to be read against the win/loss ratio, and that is exactly the relationship this calculation makes visible.
What does the target expectancy field change?
Left at zero, the calculation returns the rate that puts a strategy at exact breakeven. Enter an amount and you get the rate needed to average that sum per trade instead. For example, with an average win of 150 and an average loss of 100, aiming for 25 per trade requires (25 + 100) ÷ 250, that is 50% winning trades.
What does an actual rate just above the threshold mean?
That the expectancy is slightly positive on the numbers entered, nothing more. With a threshold at 40% and an actual rate of 42%, two points of margin, a perfectly ordinary losing streak is enough to push a small sample below the threshold for a while. The larger the gap and the longer the sample, the more solid the reading · the Risk of ruin tool puts a number on that fragility, and the Monte Carlo one makes it visible by replaying it.
Why does the size of my trades change nothing in the result?
Because the formula divides a loss by a sum of wins and losses: doubling every amount doubles the top and the bottom of the division, and the result does not move. An average win of 150 against a loss of 100 gives the same 40% threshold as a win of 15,000 against a loss of 10,000. That is a strength of the figure: it compares strategies without being distracted by account size. Size itself is what the position size calculator handles.
See also
Monte Carlo
Replay your trading system across hundreds of randomly drawn trade sequences. See the median, best and worst outcomes and how wide the range of paths really is.
Expectancy
Work out your strategy's expectancy from win rate, average win and average loss. See what a trade returned on average, in your currency and in R multiples.
Kelly
Compute the Kelly criterion from your win rate and win/loss ratio, and see the half and quarter Kelly figures traders actually watch. Free, no sign-up.