Core terms
Breakeven win rate
The win rate at which expectancy is zero for a given average win and average loss: average loss ÷ (average win + average loss), using net figures. Before costs it is 1 ÷ (1 + ratio).
At a planned 2:1 ratio, a process breaks even by winning 1 ÷ 3 = 33.3% of trades, before costs. Costs and slippage raise the figure. With a 5-cent stop and a 10-cent target, $0.005 per share of costs lifts it to 36.7%, and one cent of stop slippage to 40.6% (computed, Illustrative). On a 50-cent stop the same cents move it by well under one percentage point.
With frequent scratches, the simple formula no longer holds: breakeven is where win rate × average win equals loss rate × average loss plus scratch rate × average scratch cost. Holding the mix of stops and time stops fixed, a plan with a 35/45/20 split of targets, stops and time stops broke even at a target share of about 32% (computed, Illustrative).
What traders should verify
Write the breakeven win rate after costs into the plan, then compare your logged target share and its interval with it. A share whose interval still covers breakeven has not shown an edge.
Do not conflate
Trader usage; there is no official definition. The formula is standard arithmetic, but inputs vary (planned vs. realized, gross vs. net, scratches in or out). A win rate above breakeven over a small sample can be chance.
Primary source
Trader usage: there is no official definition, and platforms and tools may calculate it differently.