Payoff ratio (win/loss ratio)

The payoff ratio is the average winning trade divided by the average losing trade. A payoff of 2 means winners make twice what losers cost. Together with the win rate it sets the break-even point: at a payoff of 2, any win rate above 33.3% makes money.

Trend and breakout strategies often have low win rates and high payoffs. Mean-reversion strategies tend to win more often with smaller payoffs. Neither is better on its own. Expectancy decides which one makes money.