What is Win Rate in Trading?

Understanding Win Rate in Trading

Win rate represents the percentage of trades closed with a profit out of the total number of trades executed. It's calculated as (Number of Winning Trades / Total Trades) x 100. While a high win rate seems attractive, it's meaningless in isolation without considering the size of wins versus losses. A 70% win rate losing $1,000 on average losers and making $200 on winners will destroy an account. Win rate must be evaluated alongside risk-reward ratio to determine true profitability.

Win Rate and Expectancy

Win rate combines with average win size and average loss size to determine expectancy—your expected profit per trade over many trades. A strategy with 40% win rate but 3:1 reward-to-risk ratio is more profitable than one with 65% win rate and 1:2 reward-to-risk. Professional traders focus on expectancy, not win rate alone. Many successful traders maintain 45-55% win rates while achieving profitability through superior risk management and letting winners run while cutting losers quickly.

The Win Rate Trap

Many traders become obsessed with improving win rate at the expense of profitability. They exit winners quickly to bank profits (destroying average win size) and hold losers hoping for reversals (increasing average loss size). This produces high win rates with terrible expectancy. Focus instead on proper risk-reward ratios per trade. Accept that losses are inevitable—what matters is keeping losses small and letting winners grow sufficiently to overcome them.