Win Rate
The percentage of your trades that close at a profit.
Also called: hit rate · accuracy · strike rate
In plain language
Win rate is the most quoted and least useful number in trading when taken alone. It says nothing about the size of the wins or the losses.
A 90% win rate is easy to manufacture: set a tiny target and an enormous stop. One loss erases twenty wins.
Win rate only becomes meaningful next to risk/reward. Together they produce expectancy, which is the number that actually decides profitability.
The formula
Win Rate
Winning Trades ÷ Total Trades × 100
Why it matters
Knowing the win rate your risk/reward requires stops you from abandoning a perfectly good strategy during an ordinary run of losses.
Common mistakes
- Optimizing for a high win rate at the expense of the size of the average win.
- Comparing win rates between strategies with completely different risk/reward profiles.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The average amount you expect to win or lose per trade over a large sample.
How much you stand to gain compared with how much you stand to lose on a trade.
The win rate a strategy needs, at a given risk/reward, just to avoid losing money.
A trade’s result expressed as a multiple of the amount you originally risked.
The tendency to feel losses about twice as strongly as equivalent gains.