# Trading Return on Risk Projection Tool

A link to view and download my Return on Risk Projection Tool Google Sheet can be found at the end of this post.

All too often, traders are focused on their win rate. However, as the following table illustrates, win rate should always come second to Return on Risk.

In the table above, the following variables are set:

• The Initial Account Balance is \$100,000
• The percent of the Initial Account Balance risked per trade is 1%
• The dollar amount risked per trade (1R) is \$1,000 (\$100,000 x 1%)
• The number of round trip trades per week is 20
• The average commissions and fees per trade is \$40
• The average Win Return on Risk is 2 (in other words, the average win is 2x (2R) the size of the average loss (-1R)

When looking at the table, you’ll notice that, given all of the above variables, profitability is achieved with a win rate of just 35%, or roughly 1 out of 3 trades. This means that you could lose on 2 trades (-2R) and win on the third with a return of 2R and have a breakeven to very slightly negative P&L.

Let’s adjust the average Win Return on Risk to 3 and see how things change.

When adjusting the average Win Return on Risk to 3, breakeven is now achieved at a win rate of 26%. This means that breakeven can be achieved by losing on 3 trades (-3R) and winning on only 1 with a return of 3R. Pretty fucking awesome son.