Trading metrics explained simply
Five numbers tell you more about your trading than any account balance: win rate, profit factor, expectancy, R-multiple and drawdown. Here are formulas, examples and good benchmarks.
Win rate
The win rate is the share of winners among all trades with a profit or loss.
Win rate = winners ÷ (winners + losers) × 100
Example: 27 winners and 23 losers gives 54 %. On its own the win rate says little. An 80 % win rate is useless if the few losses wipe out the many small wins. With 35 % you can be very profitable if your winners are three times the size of your losers.
Profit factor
Profit factor = sum of all wins ÷ sum of all losses
Example: $4,200 in wins and $2,800 in losses gives a profit factor of 1.5. Below 1 you lose money, above 1 you are profitable. Benchmarks: 1.3+ decent, 1.5+ solid, 2+ very strong. Values above 3 rarely hold over many trades.
Expectancy
Expectancy is your average result per trade. It is the most important number because it combines win rate and win size.
Expectancy = win rate × avg. win − loss rate × avg. loss
Example: 40 % winners with an average win of $300 and 60 % losers with an average loss of $150 gives 0.4 × 300 − 0.6 × 150 = $30 per trade. Positive means you make money over many trades.
Calculator: expectancy
Expectancy per trade: – · Payoff: – · break-even win rate: –
R-multiple
R stands for your planned risk per trade, the amount you lose if your stop is hit.
R-multiple = result ÷ planned risk
Example: you risk $50 (entry-to-stop distance × size) and make $150. That is +3 R. A loss at your stop is −1 R. The advantage: R-multiples are comparable regardless of account size. An average of +0.3 R means you make 30 % of your risk per trade on average. Losses much bigger than −1 R show that you move stops or don't set them.
Maximum drawdown
Maximum drawdown is the largest drop of your equity curve from a peak to the following low.
Drawdown = (peak − low) ÷ peak × 100
Example: your account grows to $12,000 and then falls to $9,600. That is a 20 % drawdown. Important: to recover a 20 % loss you need a 25 % gain, after a 50 % loss you need 100 %. That's why risk management matters more than win rate.
Which metric matters most?
Look at expectancy and profit factor first: do you make money over many trades at all? Then at drawdown: can you handle the swings psychologically? Win rate and R-multiple then explain why the numbers look the way they do and where to improve.
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Start for freeFAQ
What is a good profit factor?
Above 1 you are profitable. Around 1.5 is considered solid, 2 and above very strong, each measured over at least 50 trades.
What win rate do I need?
It depends on the ratio of average win to average loss. With 2 to 1 a bit over 33 % is enough, with 1 to 1 you need over 50 %. The calculator above shows the break-even value.
How do I calculate the R-multiple without a stop?
You can't in a meaningful way. Without a stop there is no planned risk. Log a stop for every trade, even if you execute it manually.