Fees vs Win Rate: The Break-Even Reality
Learn how trading costs change required win rate and expectancy. Model break-even with fees and slippage and avoid strategies that look good pre-cost.
A strategy can look profitable but fail after costs. If you trade frequently or target small moves, costs dominate.
Costs change expectancy
Winners often exit with better fills. Losers slip more. That imbalance can flip expectancy negative.
Break-even win rate
Compute net average win and loss after costs, then calculate expectancy: EV = (WinRate x AvgWin) - (LossRate x AvgLoss)
What to do if costs kill edge
- Trade less frequently
- Target larger moves
- Improve execution
- Avoid illiquid markets
Tools: