Win Rate
The percentage of your trades that close at a profit.
Also called: hit rate · accuracy · strike rate
Written by Javier Sánchez Ros
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
Worked through
A 90% win rate that loses money
- 90 wins at +0.2R
- +18R
- 10 losses at −3R
- −30R
- Net over 100 trades
- −12R
- Win rate
- 90%
Nine trades in ten are winners and the account shrinks. The wins are small because the target was close; the losses are large because the stop was far away, or moved, or was not there at all. Every individual trade felt like it was going well.
This shape is not exotic — it is what happens naturally when a trader takes profits quickly to enjoy being right and lets losers run in the hope of getting back to flat. It produces a beautiful win rate and a falling balance, and the win rate is the number people quote.
Which is the whole lesson: win rate alone says nothing. It is half of a fraction, and the other half is the average size of a win against the average size of a loss. Either number can be made to look excellent by ruining the other.
Read the two together and a 40% win rate at 1:2.5 beats this 90% comfortably. It also feels much worse to trade, which is why the worse strategy is the one people keep.
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.