Break-even win rate calculator
Find the win rate at which average wins exactly pay for average losses and trading costs.
How it is calculated
Costs are paid on every trade, so they make each win smaller and each loss larger:
At a win rate p, the average trade is p × net win − (1 − p) × net loss. Break-even is the win rate that makes this zero. Solving for p gives the formula above.
Because the cost is taken off the win and added to the loss, the two changes cancel in the bottom line: net win + net loss = average win + average loss. Only the top of the fraction grows, which is why costs raise the break-even win rate so directly. With no costs the formula simplifies to 1 ÷ (1 + payoff ratio), the same figure the risk reward calculator shows.
The same trades, with and without costs
Average win 150, average loss 100
| Cost per trade | Working | Break-even win rate |
|---|---|---|
| 0 | 100 ÷ (150 + 100) | 40.00% |
| 5 | (100 + 5) ÷ (145 + 105) | 42.00% |
A cost of 5 per trade, 5% of the average loss, lifts the break-even win rate by two percentage points.
Short-term trades with small averages
Average win 12, average loss 10, cost 3 per trade.
| Step | Working | Result |
|---|---|---|
| Net win | 12 − 3 | 9 |
| Net loss | 10 + 3 | 13 |
| Break-even win rate | 13 ÷ (9 + 13) | 59.09% |
| Before costs | 10 ÷ (12 + 10) | 45.45% |
When the cost is large relative to the average trade, it moves the break-even win rate by far more: here by 13.6 percentage points.
Pitfalls and assumptions
- Do not count costs twice. If the average win and loss come from a report that already deducts commission and swap, enter a cost of 0.
- One unit for everything. Averages in account currency need a cost in account currency; averages in R need the cost in R.
- Averages hide spread. A few very large wins or losses move an average a long way. The break-even figure is only as representative as the trades behind the averages.
- Break-even trades. Trades closed at zero count as neither wins nor losses in most records, but they still pay costs. If there are many of them, they raise the true break-even point.
- A threshold, not a target. A win rate above break-even means the recorded averages paid for themselves in that sample. It does not show that the same averages will hold.
Frequently asked questions
What is a break-even win rate?
It is the percentage of trades that must be winners for total wins to equal total losses and costs, given the size of the average win and the average loss. Below it the trades lose money on average; above it they make money on average.
How do you calculate the break-even win rate with commissions?
Take the cost off the average win and add it to the average loss, then divide the net loss by the sum of the net win and net loss. With an average win of 150, average loss of 100 and cost of 5: 105 ÷ (145 + 105) = 42%.
What win rate breaks even with a 1:2 risk reward ratio?
Before costs, 1 ÷ (1 + 2) = 33.33%. With costs it is higher: an average win of 200, average loss of 100 and a cost of 5 need (100 + 5) ÷ 300 = 35%.
Does a win rate above break-even mean a strategy is profitable?
It means the trades in that sample made money after costs, if the averages are accurate. Whether future trades behave the same way is a separate question the arithmetic cannot answer, and small samples can drift a long way from their long-run averages.
Should the average loss be entered as a negative number?
Enter it as a positive size, such as 100 for an average loss of −100. A leading minus sign is ignored, so either form gives the same result.
Related calculators
- Trading expectancy calculatorThe average amount a set of trades makes or loses per trade, from win rate, average win and average loss.
- Risk reward ratio calculatorThe reward-to-risk ratio from entry, stop and target, and the win rate that ratio needs to break even.
- Risk of ruin calculatorHow often simulated accounts with your win rate, payoff and risk per trade fall to a set drawdown.
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