Performance Metric

Average Loss — Definition & Example

Mean loss on losing trades — paired with average win to assess risk-reward asymmetry.

Average loss is the mean dollar amount lost on losing trades. The ratio of average win to average loss is one of the most important diagnostics in retail trading: when this ratio drops below 1.0, the strategy needs a >50% win rate just to break even. A healthy ratio is 1.5-2.0 — meaning your typical winner is 1.5-2x larger than your typical loser.

Formula

Average Loss = Sum of losses on losing trades / Number of losing trades

Example

Across 25 losing trades, total loss was ₹20,000. Average loss = 20,000 / 25 = ₹800.

Average Win Win Rate Expectancy Risk-Reward Ratio Hope & Hold Ignoring Stop-Loss

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Average Loss — Definition & Example

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