"What's your win rate?" is the question every beginner asks. It's also the wrong one to obsess over. Here's why profit factor and expectancy matter more.
Win rate alone lies
Win rate is simply the percentage of trades that make money. The catch: a high win rate can still lose money, and a low one can be very profitable.
- Win 90% of trades for +1 each, lose 10% for −10 each → you lose overall.
- Win 35% for +3 each, lose 65% for −1 each → you win comfortably.
Win rate ignores the size of wins versus losses — which is everything.
Profit factor
Profit factor = total profits ÷ total losses.
- Above 1.0 = profitable. Many solid systems sit around 1.3–1.8.
- It captures what win rate misses: it weighs how big your winners are against your losers.
Expectancy: the number that matters
Expectancy is the average amount you can expect to make per trade:
(Win rate × average win) − (Loss rate × average loss)
A positive expectancy means that, over many trades, the system makes money — regardless of whether the win rate is 40% or 60%.
Why this matters for your psychology
Chasing a high win rate pushes traders to cut winners early and let losers run — the exact opposite of an edge. Accepting a lower win rate with a strong risk-reward is often the more profitable path, but it requires sitting through more losing trades.
Track all of this in your trading journal.
Don't ask "how often am I right?" Ask "over 100 trades, does this make money?" That's expectancy — and it's the only score that counts.
Education only — not financial advice.