Win Rate
The percentage of trades that close at a profit. High win rate does not guarantee profitability without a favourable risk-reward ratio.
Formula
Win Rate = (Number of Winning Trades / Total Trades) × 100
Win rate (or win percentage) is the proportion of trades that end in profit. It feels important psychologically, but in isolation it means almost nothing — a 90% win rate paired with tiny winners and one catastrophic loser is a losing system.
Win rate must always be evaluated alongside average win size and average loss size. A 40% win rate can be perfectly profitable if winners are at least 1.5× larger than losers.
Example
100 trades: 45 winners at avg $200, 55 losers at avg $100. Win rate = 45%. Net P&L = (45 × $200) − (55 × $100) = $9,000 − $5,500 = +$3,500 profit. Low win rate, positive expectancy.
Related Terms
Expectancy
The average dollar amount you expect to make per dollar risked, calculated from your win rate and average win/loss sizes.
IntermediateKelly Criterion
A formula that calculates the theoretically optimal fraction of capital to risk per trade to maximise long-run account growth without ruin.
AdvancedProfit Factor
Gross winning trades divided by gross losing trades. A profit factor above 1.5 indicates a reliable positive edge.
BeginnerR-Multiple
A trade's result expressed as a multiple of initial risk. A trade that earns 2× the amount risked is a +2R winner.
IntermediateRisk of Ruin
The statistical probability that a trader will lose enough capital to be forced out of trading entirely, given their edge and risk per trade.
AdvancedRisk-Reward Ratio
The ratio of potential profit to potential loss on a single trade. A 1:2 R:R means you risk $1 to make $2.
BeginnerTrade Journal
A systematic record of every trade including entry, exit, size, reasoning, and outcome — the primary tool for improving a trading edge.
Beginner