Profitability is not about winning often. It is about the relationship between how often you win and how much you win compared with how much you lose.
Expectancy
Expectancy = (win rate × average win) − (loss rate × average loss). A strategy that wins 40% of the time with an average win of 2R and an average loss of 1R has an expectancy of 0.4 × 2 − 0.6 × 1 = +0.2R per trade.
Break-even win rates
- 1:1 risk-reward → you need more than 50% winners.
- 1:2 risk-reward → more than 33%.
- 1:3 risk-reward → more than 25%.
Applying it to a challenge
With 1% risk per trade and +0.2R expectancy, you gain on average 0.2% per trade — about 50 trades to reach a 10% target. Knowing this number helps you plan a realistic timeline instead of forcing trades.