Performance Metric
Win Rate — Definition & Example
The percentage of trades that closed at a profit out of all closed trades.
Win rate is the most-cited but least-useful single metric for evaluating a trading strategy. A 70% win rate sounds impressive but is meaningless without knowing the size of average wins versus average losses — a strategy can have 70% win rate and still lose money if losers are 3x the size of winners. Win rate must always be paired with risk-reward ratio to assess true edge.
Formula
Win Rate = (Number of Winning Trades / Total Trades) × 100%Example
Out of 100 trades, 55 closed at a profit and 45 at a loss. Win rate = 55/100 = 55%. If average win is ₹500 and average loss is ₹800, the strategy still loses money despite the >50% win rate.
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