Ratio avg win / avg loss

The relationship between the size of an average winning trade and an average losing trade. This metric measures the strategy's "payoff" efficiency, representing how many units of currency are gained for every unit lost on an average trade basis.

Exclusions: This ratio is based on realized results from closed positions. It does not factor in the frequency of trades (Win rate) or currently open positions.

Strategic value: This is one of the two "levers" of profitability. A high ratio (e.g., 3:1) means your winners are three times larger than your losses, allowing the strategy to remain profitable even with a low win rate. Conversely, a low ratio (e.g., 0.5:1) requires a very high win rate to stay net positive.

Calculation Formula

The ratio is determined by dividing the average gain by the value of the average loss.