Win rate vs. risk:reward: which number matters more?

Win rate is often the first number traders compare, but on its own it can be misleading.

A trader who wins 40% of the time can still make money, while a trader who wins 70% of the time can lose it. The difference comes from risk:reward, which compares how much you stand to make with how much you risk.

What the two numbers measure

• Win rate = wins ÷ (wins + losses). Break-even trades and open trades don't count.
• Risk:reward (RR) = the distance from entry to take profit, divided by the distance from entry to stop loss. A trade that risks 10 pips to make 20 has an RR of 1:2.

You need both numbers to judge whether a set of trades is profitable.

The break-even win rate

For any RR, there is a win rate at which you neither make nor lose money before costs:

Break-even win rate = 1 ÷ (1 + reward), where reward is the "2" in 1:2.

Planned RR	Break-even win rate
1 : 0.5	67%
1 : 1	50%
1 : 1.5	40%
1 : 2	33%
1 : 3	25%

With an RR of 1:2, you need to win a little more than one trade in three. With an RR of 1:0.5, you need to win two trades in three just to break even.

An example with two traders

This example measures results in R, where one R is the amount risked on a trade.

• Trader A wins 40% of trades at 1:2. Per 10 trades: 4 wins × 2R − 6 losses × 1R = +2R.
• Trader B wins 70% of trades but takes profit early, at 1:0.4. Per 10 trades: 7 wins × 0.4R − 3 losses × 1R = −0.2R.

Trader B wins more often but still loses money over these 10 trades.

What this means for your journal

1. Record stop loss and take profit on every trade. You need both to measure RR. In Red Candle, Planned RR is calculated automatically from entry, stop loss and take profit.
2. Set a minimum RR. Go to Checklist & Rules → Minimum risk : reward. Log Trade warns you when a trade's planned RR is lower.
3. Read win rate and RR together. The Journal shows win rate and average planned RR for the same period and filters.
4. Check trades without a stop. A trade with no stop loss has no defined risk, and its RR can't be measured.

Planned RR shows what you intended. Moving the stop, closing early or letting a winner run all change the actual result, so write notes and review the trade afterwards.

Common mistakes

• Moving take profit closer to secure a win lowers your RR and raises the win rate you need.
• Drawing conclusions from a small sample. Ten trades say very little, so look at 30–50 or more.
• Mixing setups. One strong setup can hide weak ones, so compare them separately with the Setup filter.

Key takeaways

• Win rate alone doesn't show whether you are profitable. You also need RR.
• The break-even win rate is 1 ÷ (1 + reward): 33% at 1:2 and 50% at 1:1.
• Record stop loss and take profit on every trade so RR can be measured.
• Set a minimum RR, and review both numbers per setup over enough trades.