Trading
Win Rate
The percentage of closed trades that were profitable, measured as winning trades divided by total trades.
Formula
Win Rate = Winning Trades ÷ Total Closed Trades × 100%
Variables
Winning Trades- Number of profitable trades
Total Closed Trades- All completed trades
Worked Example
Scenario: 58 profitable trades out of 100 closed trades = 58% win rate.
Steps:
- Count total trades closed: 100
- Count profitable trades: 58
- Divide: 58 ÷ 100 = 0.58 = 58%
When to Use This Formula
- Track trading performance
- Combine with average win/loss to assess profitability
- Evaluate strategy effectiveness
Limitations & Assumptions
- Ignores profit and loss magnitude
- High win rate does not guarantee profit (large losses can exceed many small wins)
- Does not account for risk or capital allocation
Common Questions
Is 50% win rate good?
Yes, if average win is larger than average loss. A 50% win rate with 1:2 risk-reward is profitable.
Can a strategy profit with <50% win rate?
Yes. If wins are larger than losses, a <50% win rate can still be profitable (depends on expected value).
Measuring return and risk
- Risk-reward ratio formulaFormula
- Beta formulaFormula
- Alpha formulaFormula
- Sharpe ratioDefinition
- Sortino ratioDefinition
Reference note: This is an educational mathematical reference. The formula's applicability depends on assumptions, market conditions, and use case. Always verify results independently and consult domain experts for decisions.