Is your strategy above the breakeven line?

What win rate do I need at 1:2 risk-reward?

At a reward-to-risk of 1:2, you break even when you win one trade in three — 33.3% — before charges. After charges you need a little more, and how much more depends on how large your charges are compared with the rupees you risk on each trade.

The breakeven line before charges

Measure every trade in units of R, the rupees you risk on it. A winner at 1:2 earns 2R; a loser costs 1R. If you win a share W of your trades, the average result per trade is:

W × RR − (1 − W)

Set that to zero and solve for W:

Breakeven win rate = 1 ÷ (1 + RR)

The higher your reward-to-risk, the lower the win rate you need. But a wider target is also hit less often, so the two numbers move together. You cannot pick one without the other.

How charges raise the line

Every trade pays brokerage, STT, stamp duty, exchange fees, GST, DP charges and, on a funded position, MTF interest — on winners and losers alike. Write the charges per trade as c and the risk per trade as R. Each trade now costs c ÷ R extra units of risk, so the result per trade becomes:

W × RR − (1 − W) − c ÷ R

and the breakeven win rate becomes:

Breakeven win rate = (1 + c ÷ R) ÷ (1 + RR)

Worked example: ₹2,000 risk, ₹60 charges

You risk ₹2,000 per trade and your charges average ₹60 per round trip.

• Charges ÷ risk = 60 ÷ 2,000 = 0.03
• At 1:2: (1 + 0.03) ÷ (1 + 2) = 1.03 ÷ 3 = 34.3%
• At 1:1.5: (1 + 0.03) ÷ (1 + 1.5) = 1.03 ÷ 2.5 = 41.2%

So at 1:2 your charges lift the line from 33.3% to 34.3% — one percentage point.

Now suppose you cut the risk to ₹300 per trade but the charges stay at ₹60, because flat fees such as the DP charge do not shrink with the position:

• Charges ÷ risk = 60 ÷ 300 = 0.2
• At 1:2: 1.2 ÷ 3 = 40.0%

The same strategy now needs a 40% win rate instead of 34.3%. Small positions carry a heavier cost burden, which is why the charges must be part of the arithmetic, not an afterthought. The Trading Charges Calculator works out what a delivery trade costs, component by component.

From breakeven to expectancy

The breakeven line tells you where a strategy stops losing. How far above it you are is your expectancy: the average result per trade in R.

Take the ₹2,000 example with a 40% win rate at 1:2:

• 0.40 × 2 − 0.60 − 0.03 = 0.80 − 0.60 − 0.03 = 0.17R per trade
• In rupees: 0.17 × ₹2,000 = ₹340 per trade, on average

That is an average over many trades, not a forecast for the next one. A run of losses is normal even for a strategy above the line; the Drawdown Recovery Calculator shows how long those runs can be.

Use your real numbers, not hoped-for ones

The win rate and reward-to-risk that matter come from your own closed trades:

• measure reward-to-risk against the stop-loss each trade started with, not one you moved later;
• include every charge, including MTF interest and the fees billed outside the contract note;
• count enough trades — twenty or thirty at the very least — before trusting either figure;
• remember that a gap or slippage can make a loss larger than 1R, which raises the line further.

Until your own trades put you above the line, keep the capital small. Your risk per trade is the lever: the Position Size Calculator turns it into a quantity.

Educational content only. It is not investment advice and not a recommendation to buy or sell any security. Prices in examples and illustrations are made up. Patterns and rules fail often; past behaviour guarantees nothing.