Part 3 · Manage risk

10Count what remains after trading

Costs change the arithmetic more than most beginners expect.

A 50-pip target and 30-pip stop give a gross reward-to-risk of 1.67. With only full wins and losses and no costs, break-even is 30 / (50 + 30) = 37.5%.

Deduct an illustrative 2-pip cost: a winner nets 48 pips, a loser loses 32, and break-even rises to 40%.

Calculator 4 of 5

Break-even win rate

Cost per trade (pips)

With a 50-pip target and 30-pip stop, break-even is 37.5%. This is arithmetic, not a forecast.

Expectancy example

At a hypothetical 45% win rate: (0.45 × 48) − (0.55 × 32) = 4 pips per trade. This constructed example says nothing about the strategy's real win rate.

Calculator 5 of 5

Expectancy per trade

Hypothetical win rate (%)Cost per trade (pips)

Expectancy: 4 pips per trade (0.13R). A constructed example, not the strategy's real win rate.

Honest note

A good-looking average can hide a painful losing streak. Track the largest peak-to-trough drop, not just the total.

Key takeaway

Report results in net money or R, where 1R is your planned initial risk.

Try it

Find the win rate at which expectancy turns negative with a 2-pip cost.

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