Payoff Ratio (Adjusted Win-Loss Ratio)
The ratio of average winning trade to average losing trade. Also called Adjusted Win-Loss Ratio in TradesViz.
Formula
Payoff Ratio = Average Win / Average Loss
More Details
What is Payoff Ratio?
Payoff Ratio (also called Win/Loss Ratio, Reward-to-Risk Ratio, or Adjusted Win-Loss Ratio in TradesViz) compares your average winner to your average loser.
Formula
Payoff Ratio = Average Win / Average Loss
Required Payoff by Win Rate
To break even (before commissions):
| Win Rate | Required Payoff |
|---|---|
| 30% | 2.33:1 |
| 40% | 1.50:1 |
| 50% | 1.00:1 |
| 60% | 0.67:1 |
| 70% | 0.43:1 |
High Payoff vs High Win Rate
Most traders fall into two camps:
High Win Rate, Low Payoff (Scalpers)
- 70% win rate, 0.5:1 payoff
- Many small wins, occasional larger loss
Low Win Rate, High Payoff (Trend Followers)
- 35% win rate, 3:1 payoff
- Many small losses, occasional big win
Both can be profitable!
TradesViz Analysis
- Payoff ratio per setup
- Distribution of win/loss sizes
- Optimal payoff discovery
- Time-based patterns
Where to find it in TradesViz
Summary > Overall Statistics > Scores/Metrics shows this as 'Adjusted Win-Loss Ratio' (Avg Win / Avg Loss). Use Pivot Grid to calculate payoff ratio per setup, symbol, or any custom grouping. Performance Metrics & Ratios > Returns Distribution visualizes win/loss size distributions.
Example
Average win of 300 and average loss of 150 gives a 2.0 Payoff Ratio