[{"data":1,"prerenderedAt":1236},["ShallowReactive",2],{"\u002Fglossary\u002Fwhat-is-risk-reward-ratio":3,"\u002Fglossary\u002Fwhat-is-risk-reward-ratio-related":337},{"id":4,"title":5,"body":6,"category":321,"date":322,"description":323,"draft":324,"extension":325,"meta":326,"navigation":324,"path":327,"related":328,"seo":333,"stem":334,"term":335,"updated":322,"__hash__":336},"glossary\u002F5.glossary\u002Fwhat-is-risk-reward-ratio.md","What Is Risk-Reward Ratio? Break-Even Table",{"type":7,"value":8,"toc":313},"minimark",[9,19,24,35,38,44,112,115,118,122,125,138,142,162,173,189,193,224,259,269,273,306],[10,11,12,13,18],"p",{},"The risk-reward ratio is how much a trade stands to gain compared with what it stands to lose, written as 1:2 when the target is twice the distance of the stop. It is a plan before it is a result: risk is the distance to the ",[14,15,17],"a",{"href":16},"\u002Fglossary\u002Fwhat-is-a-stop-loss","stop-loss",", reward is the distance to the target. Its only real job is to set the win rate you need in order to break even.",[20,21,23],"h2",{"id":22},"how-it-works","How it works",[25,26,31],"pre",{"className":27,"code":29,"language":30},[28],"language-text","Risk-Reward = Reward per trade \u002F Risk per trade\n","text",[32,33,29],"code",{"__ignoreMap":34},"",[10,36,37],{},"A $100 stop and a $250 target is 1:2.5. That ratio maps directly onto a required win rate:",[25,39,42],{"className":40,"code":41,"language":30},[28],"Break-even Win Rate = 1 \u002F (1 + Risk-Reward)\n",[32,43,41],{"__ignoreMap":34},[45,46,47,60],"table",{},[48,49,50],"thead",{},[51,52,53,57],"tr",{},[54,55,56],"th",{},"Risk-reward",[54,58,59],{},"Break-even win rate",[61,62,63,72,80,88,96,104],"tbody",{},[51,64,65,69],{},[66,67,68],"td",{},"1:0.5",[66,70,71],{},"66.7%",[51,73,74,77],{},[66,75,76],{},"1:1",[66,78,79],{},"50.0%",[51,81,82,85],{},[66,83,84],{},"1:1.5",[66,86,87],{},"40.0%",[51,89,90,93],{},[66,91,92],{},"1:2",[66,94,95],{},"33.3%",[51,97,98,101],{},[66,99,100],{},"1:3",[66,102,103],{},"25.0%",[51,105,106,109],{},[66,107,108],{},"1:5",[66,110,111],{},"16.7%",[10,113,114],{},"Read the table in both directions. At 1:3, being wrong three times out of four still leaves the account flat. At 1:0.5 — the shape of most take-quick-profits systems — two trades in three must win before a single dollar is made.",[10,116,117],{},"Two adjustments make the planned ratio honest. Costs come off the reward and add to the risk, so a 1:2 on paper is nearer 1:1.8 on a tight stop. And the ratio holds only if the stop executes: one skipped in a gap is a risk figure that was never real.",[20,119,121],{"id":120},"why-it-matters","Why it matters",[10,123,124],{},"Risk-reward is the lever that a trader controls directly. Win rate is largely handed over by the market; the payoff is set when the order is placed, and it decides how much of the win rate is available to be wrong with.",[10,126,127,128,132,133,137],{},"It is also the number that reveals a comfortable but losing habit. Cutting winners early and giving losers room raises the win rate and lowers the payoff at the same time. The screen looks better and the account gets worse — an outcome invisible in a win rate, obvious in ",[14,129,131],{"href":130},"\u002Fglossary\u002Fwhat-is-expectancy","expectancy"," and in ",[14,134,136],{"href":135},"\u002Fglossary\u002Fwhat-is-a-profit-factor","profit factor",".",[20,139,141],{"id":140},"what-the-data-shows","What the data shows",[10,143,144,145,149,150,153,154,157,158,161],{},"The figures below describe accounts published on ShowMyTrades, not traders in general. The realised payoff of the typical published account runs the wrong way round. Across the published accounts that have trading history (August 2026), a ",[146,147,148],"strong",{},"median profit factor of 1.28"," at a ",[146,151,152],{},"median win rate of 68.8%"," implies an average winner worth about ",[146,155,156],{},"0.58×"," the average loser — a payoff of roughly ",[146,159,160],{},"1:0.58",", upside down relative to how risk-reward is normally taught.",[10,163,164,165,168,169,172],{},"The break-even win rate for that payoff is ",[146,166,167],{},"63.3%",". The median account wins 68.8% of the time and is therefore operating about ",[146,170,171],{},"five and a half percentage points"," above the line where it makes nothing at all.",[10,174,175,176,184,185,188],{},"That is the whole margin. It explains why the ",[146,177,178,179,183],{},"median ",[14,180,182],{"href":181},"\u002Fglossary\u002Fwhat-is-time-weighted-return","time-weighted return"," is +3.2%"," on accounts that win nearly seven trades in ten, and why the ",[146,186,187],{},"median deepest drawdown is 9.7%"," — roughly three times the eventual return. A payoff that thin needs the win rate held near 70% permanently, and a run of ordinary losses is enough to push it under 63.3% for a quarter.",[20,190,192],{"id":191},"where-you-see-it-on-showmytrades","Where you see it on ShowMyTrades",[10,194,195,196,199,200,203,204,208,209,212,213,216,217,199,220,223],{},"The realised payoff is on every published account page even though no row is labelled \"risk-reward\": ",[146,197,198],{},"Avg. Win"," and ",[146,201,202],{},"Avg. Loss"," sit next to each other in the ",[205,206,207],"em",{},"Trades"," group of the ",[146,210,211],{},"Advanced Statistics"," module, and their ratio is the payoff the account actually achieved rather than the one it intended. ",[146,214,215],{},"Win Rate",", ",[146,218,219],{},"Expectancy",[146,221,222],{},"Profit Factor"," are in the same module, which is enough to run the break-even arithmetic above on any account in a few seconds.",[10,225,226,227,230,231,199,234,237,238,216,241,199,244,247,248,216,252,199,255,258],{},"The planned ratio, trade by trade, is in the ",[146,228,229],{},"trades table",": the ",[146,232,233],{},"S\u002FL",[146,235,236],{},"T\u002FP"," columns show where the stop and target were set, alongside ",[146,239,240],{},"Pips",[146,242,243],{},"Profit (Gross)",[146,245,246],{},"Duration",". An account whose T\u002FP is consistently nearer than its S\u002FL is declaring its payoff in advance. Where the owner has chosen to ",[14,249,251],{"href":250},"\u002Fguides\u002Fpublic-profile-and-custom-slugs","hide those columns on the public page",[146,253,254],{},"Best Trade (Pips)",[146,256,257],{},"Worst Trade (Pips)"," in Advanced Statistics still bound the distribution.",[10,260,261,262,268],{},"To check whether a payoff holds outside its best conditions, the ",[146,263,264],{},[14,265,267],{"href":266},"\u002Fguides\u002Fcustom-analysis-and-filter-presets","Custom Analysis"," slideover recomputes Avg. Win, Avg. Loss and Expectancy on a filtered subset — one symbol, one magic number, one direction.",[20,270,272],{"id":271},"common-misunderstandings","Common misunderstandings",[274,275,276,283,289,300],"ul",{},[277,278,279,282],"li",{},[146,280,281],{},"\"A high risk-reward ratio is always better.\""," It is not free. Distant targets are hit less often, so 1:5 comes with a win rate that can fall below 17% and still be fine — and most traders cannot sit through that.",[277,284,285,288],{},[146,286,287],{},"\"My risk-reward is 1:3 because that is how I set the orders.\""," That is the intended ratio. The realised one comes from Avg. Win and Avg. Loss, and manual exits, partial closes and slippage move it every time.",[277,290,291,294,295,299],{},[146,292,293],{},"\"Risk-reward measures risk.\""," It measures the shape of one trade. Account risk comes from ",[14,296,298],{"href":297},"\u002Fglossary\u002Fwhat-is-position-sizing","position sizing"," and correlation across open trades, not from the ratio.",[277,301,302,305],{},[146,303,304],{},"\"A losing system can be fixed by widening the target.\""," Only if price actually reaches it. Widening a target without evidence lowers the win rate by exactly enough to leave expectancy where it was.",[10,307,308,309,137],{},"For the full arithmetic behind the 68.8% \u002F 1.28 gap and how to run it on your own account, see ",[14,310,312],{"href":311},"\u002Fguides\u002Fwin-rate-is-not-an-edge","why win rate is not an edge",{"title":34,"searchDepth":314,"depth":314,"links":315},2,[316,317,318,319,320],{"id":22,"depth":314,"text":23},{"id":120,"depth":314,"text":121},{"id":140,"depth":314,"text":141},{"id":191,"depth":314,"text":192},{"id":271,"depth":314,"text":272},"Risk","2026-08-19T00:00:00.000Z","Risk-reward is reward per unit risked, and it sets the win rate you need to break even. The table, the formula, and what public ShowMyTrades accounts run.",true,"md",{},"\u002Fglossary\u002Fwhat-is-risk-reward-ratio",[329,330,331,332],"what-is-expectancy","what-is-a-stop-loss","what-is-a-profit-factor","what-is-position-sizing",{"title":5,"description":323},"5.glossary\u002Fwhat-is-risk-reward-ratio","Risk-Reward Ratio","o27nAQN-jwtsWN-TvadhvQkVr75UEQr2Ph6p4md2QYg",[338,608,809,1027],{"id":339,"title":340,"body":341,"category":597,"date":322,"description":598,"draft":599,"extension":325,"meta":600,"navigation":324,"path":135,"related":601,"seo":605,"stem":606,"term":222,"updated":322,"__hash__":607},"glossary\u002F5.glossary\u002Fwhat-is-a-profit-factor.md","What Is Profit Factor? Formula, Good Values, Real Data",{"type":7,"value":342,"toc":590},[343,346,348,354,357,360,366,369,431,433,436,444,452,454,468,475,480,486,497,499,522,547,549,583],[10,344,345],{},"Profit factor is gross profit divided by gross loss: the total won across all winning trades, divided by the total lost across all losing trades. A profit factor of 1.50 means the account made $1.50 for every $1.00 it gave back. Below 1.00 the account loses money by construction, regardless of how often it wins.",[20,347,23],{"id":22},[25,349,352],{"className":350,"code":351,"language":30},[28],"Profit Factor = Gross Profit \u002F |Gross Loss|\n",[32,353,351],{"__ignoreMap":34},[10,355,356],{},"Note what the formula ignores: how long the account traded, how much capital it used, and how deep it fell along the way.",[10,358,359],{},"It can also be written in terms of win rate and average trade size, which is where it becomes diagnostic:",[25,361,364],{"className":362,"code":363,"language":30},[28],"Profit Factor = (Win Rate × Avg Win) \u002F ((1 − Win Rate) × Avg Loss)\n",[32,365,363],{"__ignoreMap":34},[10,367,368],{},"Two very different systems can land on the same value. A 30% win rate with winners four times the size of losers gives 1.71. An 80% win rate with winners half the size of losers gives 2.00. Both work; they fail differently and feel completely different to trade.",[45,370,371,381],{},[48,372,373],{},[51,374,375,378],{},[54,376,377],{},"Profit factor",[54,379,380],{},"Reading",[61,382,383,391,399,407,415,423],{},[51,384,385,388],{},[66,386,387],{},"Below 1.00",[66,389,390],{},"Loses money — structurally, not marginally",[51,392,393,396],{},[66,394,395],{},"1.00 – 1.10",[66,397,398],{},"Inside the noise. One bad week erases it",[51,400,401,404],{},[66,402,403],{},"1.10 – 1.30",[66,405,406],{},"Thin but real edge, if the sample is large",[51,408,409,412],{},[66,410,411],{},"1.30 – 2.00",[66,413,414],{},"A working strategy",[51,416,417,420],{},[66,418,419],{},"2.00 – 3.00",[66,421,422],{},"Strong. Check trade count and cost accounting",[51,424,425,428],{},[66,426,427],{},"Above 3.00",[66,429,430],{},"Rare on long histories: usually a short sample, a few outsized winners, or open losers not yet realised",[20,432,121],{"id":120},[10,434,435],{},"Profit factor is the cleanest single answer to \"does this system make money\", and it is much harder to dress up than a win rate, because every loss enters the denominator at full size.",[10,437,438,439,443],{},"It is not, however, a risk measure. Profit factor knows nothing about sequence: an account that made its money in one month and bled for eleven shows the same value as one that ground upward every week. Read it next to ",[14,440,442],{"href":441},"\u002Fglossary\u002Fwhat-is-maximum-drawdown","maximum drawdown",", or you are measuring the destination without the trip.",[10,445,446,447,451],{},"The same caution applies to a profit factor quoted from a ",[14,448,450],{"href":449},"\u002Fglossary\u002Fwhat-is-backtesting","backtest",": optimisers maximise exactly this ratio, so a high backtested value often measures the fitting process rather than the strategy.",[20,453,141],{"id":140},[10,455,456,457,460,461,467],{},"The figures below describe accounts published on ShowMyTrades, not traders in general. Across the published accounts that have trading history (August 2026), the ",[146,458,459],{},"median profit factor is 1.28"," and the ",[146,462,463,466],{},[14,464,465],{"href":311},"median win rate"," is 68.8%",". Both are calculated after costs here: swap and commission are folded into each trade before it is classed as a winner or a loser, so 1.28 is net, not gross.",[10,469,470],{},[471,472],"img",{"alt":473,"src":474},"Medians across public ShowMyTrades accounts: a 68.8% win rate beside a 1.28 profit factor","\u002Fimages\u002Farticles\u002Fwin-rate-vs-payoff.svg",[10,476,477],{},[205,478,479],{},"Two medians from the same set: the win rate looks strong, the edge behind it is thin.",[10,481,482,483,485],{},"That pairing is the point. Nearly seven trades in ten close green on the median account, and the whole edge still amounts to $1.28 earned for every $1.00 lost. Take an account sitting on both medians and invert the formula: its average winner is worth roughly ",[146,484,156],{}," its average loser. Winning often and earning well are separate achievements, and the first is far easier to manufacture — hold losers, cut winners, and the win rate climbs while the profit factor falls.",[10,487,488,489,492,493,496],{},"The median Sharpe ratio on the same set is ",[146,490,491],{},"0.05",", and the median account has ",[146,494,495],{},"171 closed trades",". At that sample size a profit factor above 3.00 is not evidence of a superior system; it is evidence that the sample is too small to have met its worst trade yet.",[20,498,192],{"id":191},[10,500,501,503,504,506,507,216,509,216,511,216,513,216,515,199,518,521],{},[146,502,222],{}," sits in the ",[146,505,211],{}," module on every published account page, alongside the numbers that explain it: ",[146,508,215],{},[146,510,198],{},[146,512,202],{},[146,514,219],{},[146,516,517],{},"Total Trades",[146,519,520],{},"Sharpe Ratio",". The six together say what the single ratio cannot.",[10,523,524,525,527,528,199,531,534,535,199,538,541,542,546],{},"Two product details matter. First, the costs already inside the ratio are itemised separately: the trades table carries ",[146,526,243],{}," with ",[146,529,530],{},"Swap",[146,532,533],{},"Commission"," as their own columns, and Advanced Statistics totals ",[146,536,537],{},"Total Commissions",[146,539,540],{},"Total Swap Paid",", so you can see how much the net figure absorbed. Across published accounts those totals stand at $4,782,670 in commissions and $862,547 in swap. Second, ",[14,543,544],{"href":266},[146,545,267],{}," recomputes the whole statistics block on a filtered subset — by date range, symbol, magic number, direction or lot size — which is how you check whether a profit factor holds up outside its best quarter or without its best symbol.",[20,548,272],{"id":271},[274,550,551,561,571,577],{},[277,552,553,556,557,137],{},[146,554,555],{},"\"Profit factor above 1 means I am profitable.\""," Only if costs are inside the ratio. Where they are not, a high-frequency system at 1.05 gross can be flat or negative ",[14,558,560],{"href":559},"\u002Fglossary\u002Fwhat-is-cost-percentage","once commission and swap are applied",[277,562,563,566,567,570],{},[146,564,565],{},"\"A high profit factor means low risk.\""," It says nothing about drawdown, position size or sequence. A martingale ",[14,568,569],{"href":297},"position-sizing"," progression can post 4.00 right up to the day it does not.",[277,572,573,576],{},[146,574,575],{},"\"It is comparable across timeframes.\""," It is not annualised. A scalper's 1.20 over 20,000 trades and a swing trader's 1.20 over 60 are not the same statement.",[277,578,579,582],{},[146,580,581],{},"\"Open trades do not affect it.\""," They do, by absence. Floating losses left open are excluded from gross loss entirely, which inflates the ratio until the position is closed.",[10,584,585,586,137],{},"For which metrics to track over time and in what order, see ",[14,587,589],{"href":588},"\u002Fguides\u002Ftracking-trading-performance","the guide to tracking trading performance",{"title":34,"searchDepth":314,"depth":314,"links":591},[592,593,594,595,596],{"id":22,"depth":314,"text":23},{"id":120,"depth":314,"text":121},{"id":140,"depth":314,"text":141},{"id":191,"depth":314,"text":192},{"id":271,"depth":314,"text":272},"Metrics","Profit factor is gross profit divided by gross loss. Below 1.0 an account loses by construction. Here are the bands and the 1.28 median across thousands of accounts.",false,{},[602,603,332,604],"what-is-drawdown","what-is-maximum-drawdown","what-is-backtesting",{"title":340,"description":598},"5.glossary\u002Fwhat-is-a-profit-factor","0loLRuqRU0mx9nEOfjdEFW6U1Fb_JAC1jN2JQSkIjuE",{"id":609,"title":610,"body":611,"category":321,"date":322,"description":801,"draft":324,"extension":325,"meta":802,"navigation":324,"path":16,"related":803,"seo":805,"stem":806,"term":807,"updated":322,"__hash__":808},"glossary\u002F5.glossary\u002Fwhat-is-a-stop-loss.md","What Is a Stop Loss? Types, Limits and Real Numbers",{"type":7,"value":612,"toc":794},[613,616,618,621,647,650,656,664,666,674,685,687,693,698,703,706,714,717,719,759,761,789],[10,614,615],{},"A stop loss is an order placed in advance to close a position at a specified price, capping the loss on that trade. It is a decision made before the trade is open and handed to the broker's server, which is the entire point: it removes the exit from the moment when you will least want to take it. It caps intent, not outcome — the fill can be worse than the level.",[20,617,23],{"id":22},[10,619,620],{},"Four variants cover almost everything in use.",[274,622,623,629,635,641],{},[277,624,625,628],{},[146,626,627],{},"Fixed stop."," A price level attached at entry and held on the broker's server. It survives a power cut, a crashed terminal and a lost connection, because it does not live on your machine.",[277,630,631,634],{},[146,632,633],{},"Trailing stop."," Follows price in the profitable direction and never moves back. It locks in gains and also turns winners into break-even trades in noisy markets. In MetaTrader the built-in version is managed by the terminal, so it only works while the platform runs — which is why EAs trail by modifying the server-side stop instead.",[277,636,637,640],{},[146,638,639],{},"Volatility-based stop."," Distance derived from current range, typically an ATR multiple, rather than a round number. The same 20-pip stop on EUR\u002FUSD and on gold is not the same risk.",[277,642,643,646],{},[146,644,645],{},"Time stop."," Exit after N hours or bars regardless of price. Rare, and underused.",[10,648,649],{},"Sizing follows from the stop, not the other way round:",[25,651,654],{"className":652,"code":653,"language":30},[28],"Position size = (Equity × Risk %) ÷ (Stop distance in pips × Pip value)\n",[32,655,653],{"__ignoreMap":34},[10,657,658,659,663],{},"Choosing a lot size first and then hunting for a stop that fits the margin is the most common way an account acquires an unbounded loss. The ",[14,660,662],{"href":661},"\u002Ftools\u002Fposition-size-calculator","position size calculator"," runs it in the correct order.",[20,665,121],{"id":120},[10,667,668,669,673],{},"A stop loss is a trigger, not a price guarantee. Once the level trades, the order becomes a market order and fills at the next available price. In a gap — a Monday reopen, a rate surprise, the Swiss franc in January 2015 — that price can be a long way past the level. The difference is ",[14,670,672],{"href":671},"\u002Fglossary\u002Fwhat-is-slippage","slippage",", and it has no ceiling. Only a guaranteed stop loss, sold by some brokers for a fee, fills at the stated price.",[10,675,676,677,679,680,684],{},"The deeper function is behavioural. Without a pre-committed exit, the decision to close a loser is taken while holding it — the worst possible moment. Everything downstream — ",[14,678,136],{"href":135},", drawdown, whether a ",[14,681,683],{"href":682},"\u002Fglossary\u002Fwhat-is-a-margin-call","margin call"," ever arrives — is decided there.",[20,686,141],{"id":140},[10,688,689,690,692],{},"Across the public accounts on ShowMyTrades with trading history (August 2026), the ",[14,691,465],{"href":311}," is 68.8% and the median profit factor is 1.28. These describe accounts published here, not traders in general.",[10,694,695],{},[471,696],{"alt":697,"src":474},"Median win rate of 68.8% beside a median profit factor of 1.28 across public ShowMyTrades accounts",[10,699,700],{},[205,701,702],{},"Winning often and earning little is the pattern a pre-committed exit exists to break.",[10,704,705],{},"Read them together, because separately each one flatters. Nearly seven trades in ten close green, yet gross profit is only 1.28 times gross loss. Both hold at once only if losers are substantially larger than winners: at a 68.8% win rate, a 1.28 profit factor implies an average loss roughly 1.7 times the average win. (Two medians of two distributions — an illustration, not one measured account, though the direction is not in doubt.)",[10,707,708,709,713],{},"That is the signature of taking profits early and letting losses run, and it is the pattern a stop loss exists to prevent. It surfaces again in the median ",[14,710,712],{"href":711},"\u002Fglossary\u002Fwhat-is-the-sharpe-ratio","Sharpe ratio"," of 0.05: return per unit of volatility barely above zero. The median account closes 171 trades, so this is not a thin sample.",[10,715,716],{},"Nor is it hand-made. Median autotrading share is 99%, and 53.9% of these accounts run above 90% automation. A missing stop loss there is a missing line of code, applied identically to every trade the system takes.",[20,718,192],{"id":191},[274,720,721,730,737,745,750],{},[277,722,723,724,726,727,729],{},"The ",[146,725,229],{}," has an ",[146,728,233],{}," column showing the stop price recorded on each position, marked in red when the trade was actually closed by it. Hundreds of rows with an empty S\u002FL column means the account trades without pre-committed exits.",[277,731,732,199,734,736],{},[146,733,198],{},[146,735,202],{}," in the advanced statistics. If Avg. Loss is a multiple of Avg. Win, stops are either absent or being moved.",[277,738,739,199,742,744],{},[146,740,741],{},"Worst Trade (P&L)",[146,743,257],{},". The largest single loss the account has taken is the real stop loss, whatever the description claims.",[277,746,747,749],{},[146,748,219],{},", shown in pips and account currency, is the per-trade average once wins and losses are combined — the number a high win rate cannot flatter.",[277,751,752,758],{},[14,753,755],{"href":754},"\u002Fglossary\u002Fwhat-is-average-trade-length",[146,756,757],{},"Avg. Trade Length",", in the same block, exposes the asymmetry: losers that last days and winners that last minutes.",[20,760,272],{"id":271},[274,762,763,769,777,783],{},[277,764,765,768],{},[146,766,767],{},"\"A stop loss guarantees my maximum loss.\""," It caps the trigger, not the fill. Gaps and thin books fill worse, sometimes far worse.",[277,770,771,774,775,137],{},[146,772,773],{},"\"Wider stops are safer.\""," A wider stop at the same lot size is a larger loss. Distance and size are one decision, not two — see ",[14,776,298],{"href":297},[277,778,779,782],{},[146,780,781],{},"\"Moving the stop gives the trade room.\""," Moving a stop away from price converts a defined loss into an undefined one. This single habit produces the Avg. Loss to Avg. Win gap above.",[277,784,785,788],{},[146,786,787],{},"\"My win rate is high enough that I do not need stops.\""," Backwards. The median account here already wins 68.8% of its trades and still only reaches a 1.28 profit factor.",[10,790,791,792,137],{},"For what to watch on your own record over time, see ",[14,793,589],{"href":588},{"title":34,"searchDepth":314,"depth":314,"links":795},[796,797,798,799,800],{"id":22,"depth":314,"text":23},{"id":120,"depth":314,"text":121},{"id":140,"depth":314,"text":141},{"id":191,"depth":314,"text":192},{"id":271,"depth":314,"text":272},"A stop loss is a pre-committed exit order that closes a losing trade at a set price. Types, why it is not a guarantee, and what thousands of real accounts show.",{},[332,331,804],"what-is-slippage",{"title":610,"description":801},"5.glossary\u002Fwhat-is-a-stop-loss","Stop Loss","AAYa1iiPaOMw4kuu8v5SZJKK5hmXtrG8EOOybDzr9vg",{"id":810,"title":811,"body":812,"category":597,"date":322,"description":1020,"draft":324,"extension":325,"meta":1021,"navigation":324,"path":130,"related":1022,"seo":1024,"stem":1025,"term":219,"updated":322,"__hash__":1026},"glossary\u002F5.glossary\u002Fwhat-is-expectancy.md","What Is Expectancy? Formula, Example, Real Data",{"type":7,"value":813,"toc":1013},[814,817,819,825,832,835,841,844,846,852,859,867,869,881,897,915,917,929,960,977,979,1008],[10,815,816],{},"Expectancy is the average result of a single trade, expressed in currency or in pips: what the account earns, on average, every time it opens a position. It is built from four numbers — win rate, average win, loss rate, average loss — and it answers \"does this system make money per trade\" in units you can multiply by a trade count. Positive expectancy repeated often enough is a business; negative expectancy is a countdown.",[20,818,23],{"id":22},[25,820,823],{"className":821,"code":822,"language":30},[28],"Expectancy = (Win Rate × Avg Win) − (Loss Rate × Avg Loss)\n\nLoss Rate = 1 − Win Rate\n",[32,824,822],{"__ignoreMap":34},[10,826,827,828,831],{},"A system that wins 40% of the time, makes $300 on a winner and loses $100 on a loser: (0.40 × $300) − (0.60 × $100) = $120 − $60 = ",[146,829,830],{},"+$60 per trade",". Four hundred trades a year is $24,000 of expected result, before position size changes and before anything goes wrong.",[10,833,834],{},"The same formula written in R multiples, where R is one average loss, strips out the account currency and makes systems comparable:",[25,836,839],{"className":837,"code":838,"language":30},[28],"Expectancy (R) = (Win Rate × Payoff) − (1 − Win Rate)\n\nPayoff = Avg Win \u002F Avg Loss\n",[32,840,838],{"__ignoreMap":34},[10,842,843],{},"Two things decide whether the output means anything. First, costs must already sit inside the inputs: spread, commission and swap come out of every trade, shrinking each winner and enlarging each loser. Second, the averages need enough trades that one outsized result cannot set them.",[20,845,121],{"id":120},[10,847,848,849,851],{},"Expectancy is the bridge between a statistic and a plan. ",[14,850,377],{"href":135}," tells you the ratio of money won to money lost; expectancy tells you what one more trade is worth, which is the number you multiply by frequency to get an expected month.",[10,853,854,855,858],{},"It also exposes the trade-off that a win rate hides. A win rate is only half of an edge — the other half is the ",[14,856,857],{"href":327},"risk-reward ratio",", and expectancy is where the two meet. Move either one and the result moves; keep both and no amount of narrative changes it.",[10,860,861,862,866],{},"And it sets the cost floor. If a strategy expects +$8 a trade and the round-turn ",[14,863,865],{"href":864},"\u002Fglossary\u002Fwhat-is-a-spread","spread"," and commission cost $7, what is left is not a strategy.",[20,868,141],{"id":140},[10,870,871,872,874,875,877,878,137],{},"The figures below describe accounts published on ShowMyTrades, not traders in general. Take the middle of the published accounts that have trading history (August 2026): a ",[146,873,152],{},", a ",[146,876,148],{}," and a ",[146,879,880],{},"median of 171 closed trades",[10,882,883,884,886,887,890,891,896],{},"Those numbers pin the expectancy of that middle account. Inverting the profit factor formula gives an average winner worth about ",[146,885,156],{}," its average loser, and the R form turns the rest into arithmetic: (0.688 × 0.58) − 0.312 = ",[146,888,889],{},"+0.087R",". Nine hundredths of one average losing trade, per trade taken. Over 171 trades the entire record adds up to roughly fifteen average losses' worth of profit — which is why the ",[146,892,178,893,895],{},[14,894,182],{"href":181}," is only +3.2%"," despite nearly seven trades in ten closing green.",[10,898,899,900,199,903,906,907,910,911,914],{},"Costs are not a rounding error at that thickness. Published accounts have paid ",[146,901,902],{},"$4,782,670 in commissions",[146,904,905],{},"$862,547 in swap",", and ",[146,908,909],{},"86.3%"," of the accounts that carry swap at all pay net negative swap. At a ",[146,912,913],{},"median trade length of 2.4 hours",", an edge of 0.087R survives only if the cost of a round turn stays small against the average loss.",[20,916,192],{"id":191},[10,918,919,921,922,924,925,928],{},[146,920,219],{}," is a row in the ",[146,923,211],{}," module on every published account page, inside the ",[205,926,927],{},"Performance Metrics"," group. It prints both units on one line — pips first, then account currency — because a pip figure travels between symbols and a currency figure travels between position sizes, and neither alone is complete.",[10,930,931,932,934,935,216,937,216,939,199,941,943,944,948,949,199,951,953,954,216,956,199,958,137],{},"Its four inputs are in the ",[205,933,207],{}," group of the same module: ",[146,936,215],{},[146,938,198],{},[146,940,202],{},[146,942,517],{},", next to ",[146,945,946],{},[14,947,757],{"href":754},", which says whether a thin per-trade edge is being earned in hours or in weeks. The costs already deducted appear as ",[146,950,537],{},[146,952,540],{},", with the per-trade detail in the trades table under ",[146,955,243],{},[146,957,530],{},[146,959,533],{},[10,961,962,963,967,968,216,971,199,974,976],{},"To test whether an expectancy is one edge or an average of several, the ",[146,964,965],{},[14,966,267],{"href":266}," slideover recomputes the whole block on a filtered subset — by symbol, magic number, direction, date range, weekday or hour — and Advanced Statistics adds ",[205,969,970],{},"Weekday",[205,972,973],{},"Hourly",[205,975,246],{}," views that split the same result without any filtering.",[20,978,272],{"id":271},[274,980,981,990,996,1002],{},[277,982,983,986,987,989],{},[146,984,985],{},"\"Positive expectancy means I will make money.\""," It means the average trade is profitable. Size the positions wrong and a positive-expectancy system still ends at zero: survival is a ",[14,988,298],{"href":297}," question, not an expectancy one.",[277,991,992,995],{},[146,993,994],{},"\"Expectancy is just my average trade.\""," Only if the average is taken net. Computed on gross profit it ignores commission and swap, which is exactly where thin edges disappear.",[277,997,998,1001],{},[146,999,1000],{},"\"A high win rate implies positive expectancy.\""," It implies nothing on its own. At a 0.58 payoff, a 60% win rate is a losing system.",[277,1003,1004,1007],{},[146,1005,1006],{},"\"The number is stable.\""," On a few hundred trades it is not. One outsized winner can lift a whole record's expectancy, and removing it is a fair test.",[10,1009,1010,1011,137],{},"For the metrics worth tracking over time and the order to read them in, see ",[14,1012,589],{"href":588},{"title":34,"searchDepth":314,"depth":314,"links":1014},[1015,1016,1017,1018,1019],{"id":22,"depth":314,"text":23},{"id":120,"depth":314,"text":121},{"id":140,"depth":314,"text":141},{"id":191,"depth":314,"text":192},{"id":271,"depth":314,"text":272},"Expectancy is the average profit or loss of one trade: (win rate × avg win) − (loss rate × avg loss). The formula, a worked example, and public accounts.",{},[331,1023,332,602],"what-is-risk-reward-ratio",{"title":811,"description":1020},"5.glossary\u002Fwhat-is-expectancy","U6yMG7Etb-uidsGFxazRu_6VJh-bM41wGZNqkAU1r7Q",{"id":1028,"title":1029,"body":1030,"category":321,"date":322,"description":1228,"draft":599,"extension":325,"meta":1229,"navigation":324,"path":297,"related":1230,"seo":1232,"stem":1233,"term":1234,"updated":322,"__hash__":1235},"glossary\u002F5.glossary\u002Fwhat-is-position-sizing.md","What Is Position Sizing? Formula and Lot Size Calculation",{"type":7,"value":1031,"toc":1221},[1032,1040,1042,1045,1051,1054,1060,1066,1069,1089,1095,1100,1102,1105,1113,1115,1130,1133,1147,1149,1154,1181,1183,1214],[10,1033,1034,1035,1039],{},"Position sizing is the decision of how large a trade to open, derived from how much of the account you are willing to lose if the trade fails. It converts a risk percentage into a lot size using two inputs: the distance to your stop and the value of one pip at that size. It is the single variable that determines an account's ",[14,1036,1038],{"href":1037},"\u002Fglossary\u002Fwhat-is-drawdown","drawdown"," profile, and it is chosen before the trade rather than discovered after it.",[20,1041,23],{"id":22},[10,1043,1044],{},"Three steps, in order.",[25,1046,1049],{"className":1047,"code":1048,"language":30},[28],"1. Risk amount   = Account balance × Risk %\n2. Pip value     = Contract size × Pip in quote currency × FX rate to account currency\n3. Position size = Risk amount \u002F (Stop distance in pips × Pip value per lot)\n",[32,1050,1048],{"__ignoreMap":34},[10,1052,1053],{},"A worked example on a $10,000 account risking 1% per trade, with a 50-pip stop on EUR\u002FUSD, where one standard lot moves $10 per pip:",[25,1055,1058],{"className":1056,"code":1057,"language":30},[28],"Risk amount   = 10,000 × 0.01      = $100\nPosition size = 100 \u002F (50 × 10)    = 0.20 lots\n",[32,1059,1057],{"__ignoreMap":34},[10,1061,1062,1063,1065],{},"Widen the stop to 100 pips and the same $100 of risk buys 0.10 lots. The risk stays constant; the size adapts. That inversion is the whole idea, and it is why sizing and ",[14,1064,17],{"href":16}," placement cannot be decided separately.",[10,1067,1068],{},"Three methods dominate in practice:",[274,1070,1071,1077,1083],{},[277,1072,1073,1076],{},[146,1074,1075],{},"Fixed lot."," Always 0.10 lots, whatever the stop or the balance. Simple, and the risk per trade drifts constantly as both change.",[277,1078,1079,1082],{},[146,1080,1081],{},"Percentage risk (fixed fractional)."," The formula above. Risk stays proportional, so losses shrink in currency terms as the account falls — the mechanism that makes recovery arithmetically possible.",[277,1084,1085,1088],{},[146,1086,1087],{},"Martingale progression."," Size increases after a loss to recover it. Wins are frequent and small, the equity curve looks immaculate, and the distribution of outcomes has a fat left tail that arrives all at once.",[10,1090,1091],{},[471,1092],{"alt":1093,"src":1094},"Doubling the lot size after every loss against a fixed fraction of equity: same win rate, same market, opposite outcomes","\u002Fimages\u002Farticles\u002Flot-progression.svg",[10,1096,1097],{},[205,1098,1099],{},"Which one an account uses is readable from the lot sizes alone.",[20,1101,121],{"id":120},[10,1103,1104],{},"Entries decide whether you win. Sizing decides whether you are still there for the next one. Two traders taking identical signals with identical stops produce identical win rates and completely different accounts, because one risked 0.5% and the other risked 8%.",[10,1106,1107,1108,1112],{},"Sizing is also where ",[14,1109,1111],{"href":1110},"\u002Fglossary\u002Fwhat-is-leverage","leverage"," does its actual damage. High leverage is not itself risk — it is permission to take risk. The risk arrives when that permission is used to open a size whose stop distance implies a loss the account cannot absorb twice in a row.",[20,1114,141],{"id":140},[10,1116,1117,1118,1121,1122,1125,1126,1129],{},"Sizing leaves its signature in the drawdown tail. Across the accounts published on ShowMyTrades that have trading history (August 2026) — accounts published here, not traders in general — ",[146,1119,1120],{},"38.2%"," have been ",[14,1123,1124],{"href":441},"more than 20% underwater"," at some point and ",[146,1127,1128],{},"17.6%"," have lost more than half their peak value.",[10,1131,1132],{},"A properly sized fixed-fractional account rarely reaches that last band. Losing 50% at 1% risk per trade requires roughly 69 consecutive losses. Accounts in that tail generally arrived another way: escalating size after losses, or a size chosen without reference to the stop at all.",[10,1134,1135,1136,906,1139,1142,1143,1146],{},"Context for who is doing the sizing: the median autotrading share on these accounts is ",[146,1137,1138],{},"99%",[146,1140,1141],{},"53.9%"," run above 90% automated, against ",[146,1144,1145],{},"42.2%"," under 10%. On more than half of the published set, position size is a line in an EA's settings — configured once and never revisited as the balance moves.",[20,1148,192],{"id":191},[10,1150,723,1151,1153],{},[14,1152,662],{"href":661}," runs the formula above with live prices, in your account currency, for percentage or fixed-amount risk and for stops expressed in price or pips.",[10,1155,1156,1157,1159,1160,1163,1164,1166,1167,1170,1171,1177,1178,1180],{},"On a published account page you can audit sizing rather than assume it. The ",[146,1158,229],{}," carries a ",[146,1161,1162],{},"Volume"," column showing the lot size of every individual trade, so a size that steps up after each loser is visible directly. ",[146,1165,267],{}," adds a ",[146,1168,1169],{},"Lot Size"," min\u002Fmax filter: set a floor above the account's normal size and see whether the surviving trades cluster immediately after losses, which is the martingale signature. ",[146,1172,1173],{},[14,1174,1176],{"href":1175},"\u002Fguides\u002Ftrading-volume-analysis","Total Lots"," in the ",[146,1179,211],{}," module gives the aggregate; across published accounts it stands at 1,724,575 lots traded.",[20,1182,272],{"id":271},[274,1184,1185,1191,1202,1208],{},[277,1186,1187,1190],{},[146,1188,1189],{},"\"Risking 2% means using 2% of my account.\""," No. 2% is the loss if the stop is hit. The margin the position occupies is a separate figure entirely, set by leverage.",[277,1192,1193,1196,1197,1201],{},[146,1194,1195],{},"\"I risk 1% per trade, so my worst case is 1%.\""," Only with one position open. ",[14,1198,1200],{"href":1199},"\u002Fglossary\u002Fwhat-is-correlation-risk","Five correlated positions"," at 1% each are one 5% trade wearing a disguise, and correlated pairs move together precisely when it hurts.",[277,1203,1204,1207],{},[146,1205,1206],{},"\"No stop loss, so no risk to calculate.\""," Without a stop, the position size formula has no denominator — the risk is not small, it is undefined, and its true value is the margin call.",[277,1209,1210,1213],{},[146,1211,1212],{},"\"Compounding means scaling up.\""," Fixed-fractional sizing scales both ways. Increasing lots after wins while holding them constant after losses is not compounding; it is a slow ratchet toward a drawdown you never sized for.",[10,1215,1216,1217,137],{},"For the full set of risk and sizing tools and when each one applies, see ",[14,1218,1220],{"href":1219},"\u002Fguides\u002Fforex-calculators-guide","the forex calculators guide",{"title":34,"searchDepth":314,"depth":314,"links":1222},[1223,1224,1225,1226,1227],{"id":22,"depth":314,"text":23},{"id":120,"depth":314,"text":121},{"id":140,"depth":314,"text":141},{"id":191,"depth":314,"text":192},{"id":271,"depth":314,"text":272},"Position sizing turns a risk percentage into a lot size using your stop distance and pip value. The formula, the three common methods, and what bad sizing costs.",{},[602,603,330,1231],"what-is-leverage",{"title":1029,"description":1228},"5.glossary\u002Fwhat-is-position-sizing","Position Sizing","qP5mfGAxSuWSiccKuy0i_N8LQtpN2UHwOG-ZOVxOViU",1787415686700]