What is a win rate?

Definition

A trading win rate divides winning trades by the total number of resolved trades. The definition of a win, treatment of partial exits and chosen sample period should be consistent before comparing strategies.

A high win rate can coexist with poor profitability when occasional losses are much larger than frequent gains. Average win, average loss, fees, drawdown and trade count are necessary companions to the percentage.

ELI5

Win rate is the share of completed trades that made money according to the strategy's rules. It describes how often the strategy won, not how much it earned overall.

For example, 23 winning trades out of 32 would be about a 72 percent win rate. The strategy could still lose money if its nine losing trades were much larger than its winning trades.

Frequently asked questions

Does a high win rate guarantee a profitable strategy?

No. Profitability also depends on the sizes of wins and losses, fees and how much capital each trade uses.

Why does trade count matter with win rate?

A small number of trades creates more uncertainty about whether the observed percentage will continue.

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