Trading math / 01
What Win Rate Breaks Even After Trading Costs?
If a typical win is 2R and a typical loss is 1R, you break even at one win in three before costs. With 0.10R in costs per completed trade, the threshold rises to about 36.67%. Here, 1R means one unit of planned trade risk.
Calculate the break-even win rate
Use the average gross win and the positive size of the average gross loss. Keep those two values and your average cost in the same unit, such as dollars or R.
Break-even win rate = (average gross loss + average cost per trade) ÷ (average gross win + average gross loss)
Multiply the result by 100 for a percentage. This calculation assumes each trade belongs to the win or loss group and that the estimated average cost stays the same as the mix changes.
Worked example with a 2-to-1 payoff
Over three trades, one +2R winner and two −1R losers add up to zero before costs. Subtract 0.10R for each of the three trades and the result is −0.30R. The break-even calculation is (1 + 0.10) ÷ (2 + 1), or 36.67%. At a 40% win rate with these same assumptions, the average net result is (0.40 × 2R) − (0.60 × 1R) − 0.10R = +0.10R per trade.
Use both entry and exit commissions and include financing when it applies. If you model execution from a reference quote, account for spread and slippage. When your figures already use actual fill prices, those execution differences are already reflected in the trade P&L. Check which charges your report has already deducted before adjusting the numbers.
Can I use results that already include costs?
Yes. If your closed trades are grouped by their net outcome and have only wins and losses, divide average net loss by the sum of average net win and average net loss. With net-flat trades in the sample, use the full expectancy calculation and keep the flat trades in the total count.
Watch the short
Can One Win in Three Break Even?
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