Win Rate: Definition, Calculation, and Limitations
Win rate represents the proportion of profitable trades among all trades over a period of time. It can be used to review strategy performance, but cannot by itself prove that a strategy is ultimately profitable.
What Is Win Rate
Win rate describes the proportion of profitable trades in a trading record. The formula is “number of profitable trades ÷ total number of trades ×100%”. For example, if 10 trades were completed, of which 7 were profitable, the win rate is 70%. It summarizes historical hit rates, but is only one dimension for evaluating a strategy.
Win Rate and the Ratio of Profitable to Losing Trades
You can also compare the number of profitable trades with the number of losing trades. If, among 20 trades, 12 were profitable and 8 were losing, the trade-count ratio is 1.5, while the win rate is 60%. This compares the number of occurrences, not the ratio of average profit per trade to average loss per trade; the two measures must not be calculated under the same ambiguous name.
Understanding the Limitations Correctly
A high win rate does not equal overall profitability, because the final result is also affected by per-trade gains, per-trade losses, and the risk-reward relationship. If many small gains are followed by occasional large losses, the overall result may still be a loss; conversely, a strategy with a relatively low win rate may be profitable if it achieves sufficiently large gains per trade.
Original Tutorial
https://www.binance.com/zh-CN/academy/glossary/win-rate
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