Win rate vs. average win and loss

Win rate tells you how often trades won. On its own it says little about whether the trading made money, because it ignores how large the wins and losses were.

The three numbers that matter together

Win rate

Winning trades ÷ all trades.

Average win and average loss

Total won ÷ number of winners, and total lost ÷ number of losers.

Expectancy per trade

Expectancy = (win rate × average win) − (loss rate × average loss). It is the average result per trade in that sample.

Two worked examples

A 40% win rate that made money

Numbers

Win rate 40%, average win $300, average loss $150.

Expectancy

(0.40 × $300) − (0.60 × $150) = $120 − $90 = +$30 per trade.

A 60% win rate that lost money

Numbers

Win rate 60%, average win $50, average loss $100.

Expectancy

(0.60 × $50) − (0.40 × $100) = $30 − $40 = −$10 per trade.

The break-even win rate

For a given average win and loss, the win rate needed to break even is average loss ÷ (average win + average loss). With an average win of $38.54 and an average loss of $52.90, break-even needs a 58% win rate. A trader winning 41% of the time with those sizes loses money even though four in ten trades win.

What usually shifts these numbers

In trade histories, a larger average loss than average win often comes from habits rather than the entry idea: holding losing trades longer than winners, adding size, or trading without a fixed stop. See 5 costly habits your history can reveal.

Educational content only. Not investment, tax or legal advice. Past results do not predict future results.