Win Rate
Win rate is the share of trades that profit - meaningful only when paired with average win and loss sizes.
Win rate is the share of trades that profit, and alone it means little: a 90% win rate can lose money if losses are far larger than wins. Pair it with average win and loss sizes.
Win rate is the percentage of closed trades that end in profit. On its own it is nearly meaningless: a 90% win rate can lose money if the 10% losers are five times the size of the winners. What matters is expectancy, which combines win rate with average win and average loss. A low win rate with a high reward-to-risk ratio is a perfectly valid profile; a high win rate with occasional large losses is a dangerous one.
How It Works
- Win rate = winning trades divided by total closed trades
- Expectancy = (win rate x average win) - (loss rate x average loss)
- Profiles vary by style: scalpers win often, trend followers win less
Trading Tips
Track expectancy, not win rate, when judging a strategy
A dropping win rate with rising average win can still be improving
Beware strategies that trade tiny risk for long streaks then give it all back
Related Terms
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