With an 8-tick target and stop on micro Nasdaq and realistic costs, you need a 77.5% win rate just to break even. Win rate on its own says nothing: you have to look at it together with the target, the stop and the costs.
The formula
If each trade costs you C ticks between commission and slippage, you make target − C when you win and lose stop + C when you lose. The minimum win rate to break even is:
break-even win rate = (stop + C) ÷ (target + stop)
With no costs and equal target and stop, it is 50%. Every tick of cost pushes it up, and it weighs more the smaller the target and the stop.
What a trade really costs
On micro Nasdaq (MNQ) each tick is worth $0.50. With a commission of about $1.20 per contract round trip (check yours) and 1 tick of slippage on entry and another on exit, each trade costs about $2.20: about 4.4 ticks. On full-size Nasdaq (NQ) a tick is worth $5 and the same commission weighs much less: we use 1.5 ticks.
| Target = stop | With 1.5 ticks of cost (NQ) | With 4.4 ticks (MNQ) |
|---|---|---|
| 8 ticks | 59.4% | 77.5% |
| 16 ticks | 54.7% | 63.8% |
| 30 ticks | 52.5% | 57.3% |
Minimum win rate to break even. The smaller the move you're after, the more the cost eats.
Calculator: what win rate do you need?
Enter your target, stop and costs. If you know your win rate (from trades you didn't use to design the strategy), it tells you how much you make or lose per trade on average. Everything is calculated in your browser; nothing is sent.
The default commission ($1.20) is for a micro. Full-size contracts (NQ, ES) cost more: enter your firm's or broker's.
The 52.4% that loses money
In our lab we trained a machine learning model on 5-minute Nasdaq bars. Out of sample it got the direction right 52.4% of the time, above 50% in all six periods we tested: there is some real predictability. But before costs that edge was worth about $0.95 per trade on average, and costs were $1.50. Result: it loses.
So when someone shows you an AI, a bot or a strategy with a 60% win rate, ask for the target, the stop and the costs, and do the math. A 60% win rate with an 8-tick target and stop on MNQ loses money; 45% with a $300 target and a $200 stop can make it.
What to do with this
- Measure your win rate after costs and on trades you didn't use to design the strategy.
- If you're after a few ticks, raise the bar: with 8 ticks on MNQ, more than half of the target goes to costs.
- If your backtest doesn't subtract costs, take off at least 4-5 ticks per trade and contract on MNQ before you believe it.
- Be wary of win rates on their own: without the average win and loss they say nothing.
How it was calculated
Exact formula for trades that end at the target or the stop, with a fixed cost per trade. Costs are reasonable assumptions, not your firm's. The machine learning model was tested on six data periods not used to train it, on 5-minute Nasdaq bars.
Simulated and hypothetical results, with the limitations that implies. Not investment advice. Firm rules change: check them on each firm's website. This article contains no affiliate links.