Break-even win rate
Payoff and hit rate trade off. Here is the exact line. · 3 min
If winners pay R and losers cost 1, you break even when the wins exactly pay for the losses: p × R = (1 − p) × 1. Solving for p gives the win rate you need just to stand still.
break-even win rate = 1 ÷ (1 + R)
| Reward : risk | 0.5R | 1R | 1.5R | 2R | 3R | 5R |
|---|---|---|---|---|---|---|
| Wins needed | 66.7% | 50.0% | 40.0% | 33.3% | 25.0% | 16.7% |
A wider target lowers the hit rate you need, but it also lowers the hit rate you get: price reaches far targets less often. There is no free lunch in the ratio itself; the edge comes from setups where your real win rate beats the break-even line.
Costs move the line: slippage and commissions shrink every win and grow every loss.