Understanding the Relationship Between Win Rate and Risk-Reward
In the world of trading, two metrics determine long-term success more than any others: your Win Rate and your Risk Reward Ratio (RRR). Most novice traders focus solely on having a high win rate, but professional traders know that profitability is a mathematical balance between how often you win and how much you win relative to your losses.
The Break-Even Win Rate Formula
The mathematical minimum win rate required to not lose money (break-even) is calculated using this formula:
Break-even Win Rate = 1 / (1 + Reward Ratio)
For example, if you have a 1:2 Risk-Reward ratio (meaning you risk $1 to make $2), your break-even win rate is 1 / (1 + 2) = 33.33%. Anything above a 33.33% win rate makes your strategy profitable over time.
What is Trading Expectancy?
Expectancy is the average amount you expect to win or lose per trade. If your expectancy is positive, you have a "trading edge." The formula used in this calculator is:
Expectancy = (Win Rate % * Average Win) – (Loss Rate % * Average Loss)
Realistic Trading Examples
Risk Reward Ratio
Min. Win Rate for Profit
Strategy Style
1:1
> 50%
Scalping / Day Trading
1:2
> 33.3%
Swing Trading
1:3
> 25%
Trend Following
function calculateTradingMetrics() {
// Get input values
var winRate = parseFloat(document.getElementById("winRate").value);
var rewardRatio = parseFloat(document.getElementById("rewardRatio").value);
var numTrades = parseFloat(document.getElementById("numTrades").value);
var riskAmount = parseFloat(document.getElementById("riskAmount").value);
// Validate inputs
if (isNaN(winRate) || isNaN(rewardRatio) || isNaN(numTrades) || isNaN(riskAmount)) {
alert("Please enter valid numerical values in all fields.");
return;
}
if (winRate > 100 || winRate = 0 ? "#27ae60" : "#c0392b";
var totalProfitEl = document.getElementById("totalProfit");
totalProfitEl.innerHTML = "$" + totalNetProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
totalProfitEl.style.color = totalNetProfit >= 0 ? "#27ae60" : "#c0392b";
var statusEl = document.getElementById("strategyStatus");
if (expectancyValue > 0) {
statusEl.innerHTML = "PROFITABLE";
statusEl.style.color = "#27ae60";
} else if (expectancyValue === 0) {
statusEl.innerHTML = "BREAK-EVEN";
statusEl.style.color = "#2980b9";
} else {
statusEl.innerHTML = "UNPROFITABLE";
statusEl.style.color = "#c0392b";
}
// Smooth scroll to results
document.getElementById("results-section").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}