Win Rate tells you what percentage of your trades are profitable. It shows how often you make money on your trades. It answers the basic question: “Out of all my trades, how many did I win?”
Win Rate = ( Number of Winning Trades / Total Number of Trades ) × 100
A high win rate can be a tempting metric to focus on, but it’s crucial to remember that it’s only one piece of the puzzle. While a 90% win rate might seem fantastic, if your average win is small and your occasional losses are significant, you could still end up losing money overall. Conversely, a trader with a 60% win rate but consistently larger average profits might achieve greater long-term success.
| How It Can Be Used | Limitations |
|---|---|
| Gauging overall trading performance | Doesn’t account for the size of profits or losses |
| Comparing different strategies or time periods | A high win rate doesn’t guarantee overall profitability |
| Setting personal performance benchmarks | May encourage overtrading to maintain high win rate |
Example 1:
- Total trades: 50
- Winning trades: 30
- Calculation: Win Rate = ( 30 / 50 ) × 100 = 60%
- Interpretation: You won 60% of your trades.
Example 2:
- Total trades: 200
- Winning trades: 140
- Calculation: Win Rate = ( 140 / 200 ) × 100 = 70%
- Interpretation: A higher win rate of 70%, indicating more frequent profitable trades.
