- Break-even win rate
- 33.3%
- Expectancy / trade
- +0.20R
$10,000 account · 1% risk per trade · 100 trades$11,726
Above the break-even line: over many trades this edge tends to grow the account, though any single run can still lose.
Interactive figure · try it
Thinking in R
R is the amount you stand to lose if your stop-loss is hit. If you buy at 100 with a stop at 98, your risk is 2 points, which is 1R. A target at 106 is 6 points away: a 3R trade.
Measuring results in R instead of money makes trades of different sizes comparable and keeps your attention on decisions rather than dollar amounts.
The break-even win rate
If your average winner is R times your average loser, you break even when you win 1 / (1 + R) of your trades. At 1:1 that is 50%. At 1:2 it falls to 33%. At 1:3 you can be wrong three times out of four and still break even before costs.
This is why professional traders obsess over where to put the stop and the target before they think about the entry.
Targets must be realistic
A 1:10 ratio looks wonderful on paper, but if the target sits beyond three resistance levels it will rarely be reached. Place targets at levels the market can actually reach, then decide if the ratio is worth it.
Key takeaways
- 1R = the distance to your stop
- Break-even win rate = 1 / (1 + R)
- Set stop and target before entry
- Targets must sit at reachable levels