Working out the real breakeven win rate for a short-target system
Posted: Sat Oct 31, 2026 9:53 am
Everyone says a scalping system needs a decent win rate. Few people calculate the number it actually needs.
Take a strategy with a three pip target and a four pip stop on a pair with a one pip spread. The naive view treats it as three to four, so breakeven is about 57 percent. The real calculation includes costs.
A winning trade nets target minus spread, which is two pips. A losing trade costs stop plus spread, which is five pips. Breakeven win rate becomes five divided by seven, around 71 percent.
That is a very different bar. A system winning 65 percent of the time looks strong and loses money.
Add a commission of half a pip round trip and the numbers shift again. Winners net 1.5 pips and losers cost 5.5, so breakeven jumps to 79 percent.
The lesson is that with small targets, costs dominate. Each pip of spread or commission moves the required win rate by a large amount.
The formula is easy to put in a spreadsheet:
- Net win equals target minus costs
- Net loss equals stop plus costs
- Breakeven win rate equals net loss divided by the sum of net win and net loss
Plugging in real, measured costs for the hours actually traded, and not the advertised spread, often shows that a system that looked fine on paper has no room for error.
It also shows the benefit of larger targets. Doubling the target to six pips with the same stop and costs drops breakeven to about 55 percent.
What breakeven win rate does the current system need after all costs, and how does it compare with the actual rate?
Take a strategy with a three pip target and a four pip stop on a pair with a one pip spread. The naive view treats it as three to four, so breakeven is about 57 percent. The real calculation includes costs.
A winning trade nets target minus spread, which is two pips. A losing trade costs stop plus spread, which is five pips. Breakeven win rate becomes five divided by seven, around 71 percent.
That is a very different bar. A system winning 65 percent of the time looks strong and loses money.
Add a commission of half a pip round trip and the numbers shift again. Winners net 1.5 pips and losers cost 5.5, so breakeven jumps to 79 percent.
The lesson is that with small targets, costs dominate. Each pip of spread or commission moves the required win rate by a large amount.
The formula is easy to put in a spreadsheet:
- Net win equals target minus costs
- Net loss equals stop plus costs
- Breakeven win rate equals net loss divided by the sum of net win and net loss
Plugging in real, measured costs for the hours actually traded, and not the advertised spread, often shows that a system that looked fine on paper has no room for error.
It also shows the benefit of larger targets. Doubling the target to six pips with the same stop and costs drops breakeven to about 55 percent.
What breakeven win rate does the current system need after all costs, and how does it compare with the actual rate?