Win Rate vs Risk Reward: Why a 70% Win Rate Can Still Lose Money

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Last updated: 16 October 2026 · By Spencer Li, CFTe

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A high win rate does not make a strategy profitable. Whether you make money depends on 2 numbers together: how often you win, and how big your average win is compared with your average loss. That second number is the reward-to-risk ratio.

The 2 are tied by one simple line. The win rate you need to break even is 1 divided by (1 + your reward-to-risk ratio). If your average win is twice your average loss, you need to win a little over 33% of the time. If your average win is only half your average loss, you need to win more than 66.7% of the time.

That is how a 70% win rate can still lose money. If the average win is smaller than about 0.43 times the average loss, 70% sits below the line. And a 30% win rate can make money, as long as the winners are big enough.

Why can a 70% win rate still lose money?

Because the wins are too small to pay for the losses. A trader on r/Daytrading summed up the problem in January 2026: a “70% Win rate” and “still not profitable.”

Here is how that happens, with one hypothetical set of round numbers. You make 100 trades and win 70 of them. Each win makes 0.4R, where R is the amount you risk on a trade. Each loss costs the full 1R.

• 70 wins × 0.4R = 28R
• 30 losses × 1R = 30R
• Net after 100 trades: −2R

Most days end green. Most weeks feel like progress. And after 100 trades the account is a little smaller than where it started. The pattern is common in strategies that grab small profits fast and let losing trades run all the way to the stop, or past it.

What win rate do you need at each reward-to-risk ratio?

This is the breakeven line, worked out for the ratios traders use most:

The formula behind it: breakeven win rate = 1 ÷ (1 + reward-to-risk). At 2 to 1, that is 1 ÷ 3, or 33.3%.

Read each row as the floor, since a real strategy needs to sit comfortably above it once commissions, spreads and slippage have come off the top of every single trade you take over a year. A strategy that only just clears its breakeven line on paper usually falls below it in a live account.

[INFOGRAPHIC: the breakeven line, win rate on one axis and reward-to-risk on the other, the profitable zone shaded above the curve, with the 70% at 0.4R and 30% at 3R examples plotted on either side]

Which matters more, win rate or reward-to-risk?

Neither one, on its own. What matters is the combination, and the number that captures it is expectancy: the average amount you make or lose per trade, measured in R.

Expectancy = (win rate × average win) − (loss rate × average loss)

Here are 4 hypothetical strategies, each risking 1R per trade:

Strategy A wins most often and is the only one that loses money. Strategy C loses 7 trades in every 10 and still comes out ahead. The full method, including how to work out your own numbers, is in the trading expectancy formula.

If you want a daily routine that checks the ratio before every trade, the free 15-Minute Swing Trader’s Checklist is at the end of this post.

Is a higher reward-to-risk ratio always better?

Here is the strongest case against chasing big ratios, and it deserves a fair hearing. In December 2025 a trader on r/Daytrading said that holding out for targets 3 times the risk “is psychological torture”. He described taking 8 losses in a row while waiting for one big winner, and how it wore down his confidence. He switched to a high win rate style and felt far better.

He has a point, and the maths backs him up. Low win rates bring long losing streaks, and they bring them often. Here is the chance of at least one run of 8 straight losses somewhere in 100 trades, assuming each trade is independent:

At a 33% win rate, a streak like his is more likely than not. If that streak makes you skip the next setup, or abandon the plan halfway through a rough month, the reward-to-risk ratio that looked so good on paper never actually reaches your trading account.

So the right balance is the one you can actually follow. Where I differ from him is on the fix. Choose your trade-off on purpose, measure it, and size each trade small enough that a long streak is survivable. At 1% risk per trade, 8 straight losses cost about 7.7% of the account. That hurts. It does not end anything.

Personally, I sit in the middle. My closed trades win roughly half the time, and the average win has been about 3 times the average loss. The record is public: every trade since April 2024, dated, losses left in.

How do you change your reward-to-risk ratio?

Through where your stop and target sit, and through what you do once the trade is open.

• The stop. A stop placed inside the normal noise gets hit often, which drags the win rate down. How to place it beyond the level that matters is in where to put your stop loss and take profit.
• The target. Set it near the closest level where the move is likely to stall, and pass on trades where that level sits less than about 2R away.
• The loss you let run. Moving the stop further away “to give it room” turns a 1R loss into a 2R loss. It is the fastest way to wreck a good ratio, and the psychology of the stoploss explains why it is so tempting.

Do note that the 2 numbers pull against each other. A wider target usually lowers the win rate, and a tighter one raises it. You do not get to set both. The market sets the trade-off, and you choose where on it to stand.

You only know your own 2 numbers if you write every trade down, which is the case for keeping a trading journal. For the full map of these ideas, read the practical guide to money and risk management.

Strategy A would have felt like the best of the 4 for most of the year, right up to the evening someone added up the R.

FAQ

What is a good win rate for trading?

There is no good win rate on its own. A 40% win rate is strong with winners twice the size of the losers, while 70% loses money if the winners are under 0.43 times the losers.

What is a good risk-reward ratio?

Many swing traders aim for at least 2 to 1. That ratio needs a win rate above 33.3% to break even, before costs.

How do you calculate the breakeven win rate?

Divide 1 by 1 plus your reward-to-risk ratio. At 1.5 to 1, that is 1 ÷ 2.5, which is 40%.

Can you be profitable with a 30% win rate?

Yes, if the average win is comfortably more than about 2.33 times the average loss. Expect long losing streaks along the way.

Is a 1 to 1 risk-reward ratio good?

It can work, but it needs a win rate clearly above 50% after costs. That leaves very little room for error.

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About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe). His trade log is public: every trade since April 2024, dated, losses left in.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

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Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.