Payoff Ratio Calculator
Measure average trade profitability asymmetry by comparing average win size to average loss size.
How the Calculation Works
Read parameters and compute total exposure: multiply order quantity by contract unit multiplier.
Evaluate terminal return at the selected target price using strict financial mathematical boundary logic.
Deduct upfront capital commitments, taxes, or net debits to produce final net profit or loss realization.
Calculation Formula
Example Calculation
Average win of ₹2,500 and average loss of ₹1,200.
Winning trades are 2.08 times larger than losing trades on average.
Assumptions & Parameters
- Calculated from closed, realized trade executions.
Frequently Asked Questions
What is a payoff ratio?
The ratio of average winning trade size to average losing trade size.
How is payoff ratio different from risk/reward ratio?
Payoff ratio measures historical realized trade performance; risk/reward is the planned target vs stop-loss before entry.
What is a healthy payoff ratio?
A ratio of 1.5x to 2.5x is considered healthy for swing and trend-following trading strategies.
Can scalpers succeed with a payoff ratio below 1.0?
Yes, but they require high win rates (70%+) to compensate for smaller wins relative to losses.
How do trailing stops impact payoff ratio?
Trailing stops let winning trades run, helping expand your historical payoff ratio.
Does payoff ratio include transaction fees?
Using net P&L provides a more accurate picture of true after-cost payoff asymmetry.