Definition
Average Win Duration is the average time your winning trades are held open. It provides insight into how long it typically takes for your trades to become profitable.
Formula
Add up the duration of all winning trades and divide by the number of winning trades.
Average Win Duration = Total Duration of Winning Trades / Number of Winning Trades
Example 1:
- Total duration of winning trades: 300 hours
- Number of winning trades: 20
- Calculation: Average Win Duration = 300 hours / 20 = 15 hours
- Interpretation: Winning trades last about 15 hours on average.
Example 2:
- Total duration of winning trades: 150 days
- Number of winning trades: 30
- Calculation: Average Win Duration = 150 days / 30 = 5 days
- Interpretation: Profitable trades typically close in 5 days.
| How It Can Be Used | Limitations |
|---|---|
| Optimizing profit-taking strategies | Doesn’t consider losing trades |
| Identifying patterns in profitable trades | May be skewed by exceptionally long trades |
| Adjusting holding periods for better results | Doesn’t account for market volatility |
In Practice
If you notice that your winning trades often reach profit targets within a certain timeframe, you can tailor your strategies to capitalize on this pattern.
