What is your win ratio and you really want to know?

What is your win ratio and you really want to know?

| Rich Clifford | Blog

What is the win ratio of your service is perhaps the question the fractalerts team receives the most.

Our answer is never a percentage but the following…

Quickly, add up all the trades you placed last month.
Was your win ratio more than 75%?
Were you only profitable 25% of the time?
If 25% is your number, should you stop trading?

Win rate is quite simply a measure of how often you win divided by the total number of trades placed.

| Win rate = Winning trades / Total trades |

But what happens if you are winning $1 nine times…and then take a one-time loss of $20.

That’s right. Your win rate is 90%, but you are at a loss of $11. 

So is win rate a useless measure?

For win rate to be any kind of a meaningful measure you need to always trade the same amount with the same risk.
Unfortunately, that is not how the markets work. There are repeating patterns but they happen in unique environments. A risk of 5 points one day is in now way similar to a risk of 5 points the next day.

So our answer to the question what is the win rate of your service is always the same. 

Win rate, win accuracy, winning percentage… All of these “stats” are gimmicks used by services to attract customers. You know better than this. Don’t fall for it.