Knowing how to read your backtesting statistics is what turns "I think my strategy works" into "I have the data to judge whether my strategy works." A high win rate on its own tells you nothing. This guide shows you what to look at and, above all, how to read the numbers together.
Win rate: what it measures and what it doesn't
Win rate is the percentage of your trades that end in profit. It's the easiest metric to understand, and also the most misleading when you look at it alone. A strategy that wins 70% of the time can still lose money if every loss is much bigger than every win.
Risk-to-reward ratio: the partner your win rate is missing
The risk-to-reward ratio (often written R:R) compares how much you risk with how much you stand to make on each trade. A 1:2 ratio means you risk 1 to make 2. Without this number next to it, your win rate means nothing.
Trade & Repeat calculates both metrics instantly from your own journal.
See plansThe table that links win rate and R:R: your breakeven point
For every risk-to-reward ratio, there's a minimum win rate below which you lose money, no matter how many trades you take. This is the breakeven table:
| Risk-to-reward ratio | Minimum win rate to break even |
|---|---|
| 1:1 (risk 1, make 1) | 50% |
| 1:1.5 | 40% |
| 1:2 | 33% |
| 1:3 | 25% |
| 2:1 (risk 2, make 1) | 67% |
If your backtest shows a win rate above the minimum for your own risk-to-reward ratio, your sample shows a statistical edge. The margin above that line is what made money in the backtest. It doesn't guarantee the same in live trading.
Your equity curve: which patterns to look for
Win rate and risk-to-reward are averages. Your equity curve shows the actual path you took to get there. A curve that climbs steadily is far healthier than one with explosive gains followed by equally sharp drops, even if the final average is similar. The second kind is much harder to stick with emotionally once real money is involved.
Check your own equity curve, not just the final average.
See plansOther metrics worth checking
- Maximum drawdown: the biggest drop from a peak in your curve to its lowest point afterward. Results here are measured in R, where 1R is the amount you risk on one trade. For example, if your curve reaches +18R and then slides back to +9R before climbing again, your maximum drawdown is 9R. That's the worst losing run you'd have to sit through.
- Expectancy: how much you win (or lose) per trade on average. It combines win rate and risk-to-reward into a single number: (win rate × average win) − (loss rate × average loss).
A full example: reading the statistics of a real strategy
Say you have a journal of 40 trades at a 1:2 risk-to-reward ratio, with 17 winners and 23 losers. That's a 42.5% win rate. As the breakeven table shows, the minimum at 1:2 is 33%, so this result sits comfortably above it.
The expectancy works out to (0.425 × 2) − (0.575 × 1) = 0.85 − 0.575 = +0.275R per trade. In other words, each trade earns a little over a quarter of what you risk, on average. That's a modest but positive result, and it only counts as a reference while more trades keep confirming it.
Now imagine the same sample included a run of 6 losses in a row at some point. That's a 6R drawdown. Before trading this strategy live, you'd need to ask yourself honestly whether you could sit through that streak without abandoning the system halfway. That question matters just as much as the final result.
How to read them together before deciding if a strategy is viable
No single metric gives you the answer. Before deciding whether a strategy deserves to move on to a demo or live account, confirm three things: a win rate above the minimum for your risk-to-reward ratio, a rising curve with no drawdowns you wouldn't be willing to tolerate, and a sample of at least 30-50 trades. If you want the full process from scratch, start with how to backtest a forex strategy step by step.
Common mistakes when reading your own statistics
- Looking only at win rate. Without the risk-to-reward ratio next to it, a high or low number doesn't tell you whether the strategy makes money.
- Drawing conclusions from small samples. Ten good trades can be luck, not a real edge.
- Ignoring drawdown when judging whether a strategy is "good." A positive expectancy paired with a drawdown you couldn't handle emotionally isn't a strategy you can actually trade, however attractive the final number looks on paper.
Frequently asked questions
- What win rate do I need to be profitable?
- It depends entirely on your risk-to-reward ratio. At 1:2, a 33% win rate is enough to break even. At 1:1, you need at least 50%. There's no such thing as a "good" win rate on its own, separate from this calculation.
- How many trades do I need before I can trust my statistics?
- Below 30 trades, any statistic can be driven mostly by luck. From 50-100 trades onward, you start to see a more reliable picture of your real edge.
- Which matters more, win rate or risk-to-reward ratio?
- Neither one on its own. It's the combination that decides whether a strategy makes money. A high win rate with a poor risk-to-reward ratio can lose money, and a low win rate with a strong one can still make money.
- What is maximum drawdown, and why does it matter?
- It's the biggest drop your equity curve takes from a peak to the lowest point that follows it. It matters because it measures the worst losing stretch you'd have to sit through emotionally, not just how much you make on average.
- What is expectancy, and how do you calculate it?
- Expectancy is how much you win or lose per trade on average: (win rate × average win) minus (loss rate × average loss). A positive number means your sample shows a statistical edge. A negative one means the strategy loses money over the long run, even if some individual trades win.
- Should I drop a strategy whose expectancy is low but positive?
- Not necessarily. A small positive expectancy can still be profitable with enough trades and solid risk management. What should worry you is a negative expectancy, no matter how many trades you pile up.
Keep reading: How to backtest a forex strategy step by step · Manual vs. automated backtesting: differences, pros and cons · Trading backtesting FAQ: the questions new traders ask most · How much backtesting you need before live trading: what the evidence says · How many trades you need for your win rate to be statistically significant · Ulcer Index, Sortino and Calmar: the risk metrics your win rate won't show you
Educational content only; it is not financial advice. Trading financial markets involves the risk of losing capital.