Payoff Ratio
Formula
Payoff Ratio = avg winner / |avg loser|
Worked example
Winners average +$400; losers average −$150.
| Average winner | ($500 + $300) / 2 = $400 |
| Average loser | (−$200 − $100) / 2 = −$150 |
| Payoff ratio | $400 / $150 |
| Result | 2.67 |
It is the other half of the edge equation: a low win rate is fine if the payoff ratio is high enough. Trend systems often run low win rates with high payoff ratios.
Like the average it is built on, a single outlier win can inflate it; review it next to the median and the R-distribution. It ignores how often you win — always read it with win rate.
How TradeJournalOS shows it
Shown on the dashboard and in breakdowns from your average winner and average loser over closed trades.
Create a free account to see payoff ratio on your own trades.
Frequently asked questions
How does payoff ratio relate to win rate? +
Together they set profitability. The minimum win rate to break even is 1 / (1 + payoff ratio); a higher payoff ratio lowers the win rate you need.
Is a higher payoff ratio always better? +
Higher is generally better, but very high payoff ratios usually come with lower win rates and longer losing streaks, which are harder to sit through.