Why Win Rate Is Misleading
A trader with a 40% win rate can be consistently profitable. A trader with a 70% win rate can blow up their account. Win rate tells you nothing without context.
Here are the five metrics that actually matter.
1. Profit Factor
Profit Factor = Gross Profit ÷ Gross Loss
Anything above 1.5 is solid. Above 2.0 is excellent. This single number captures whether your winners are large enough relative to your losers.
2. Expectancy
Expectancy = (Win Rate × Avg Win) − (Loss Rate × Avg Loss)
This tells you your average expected return per trade. Even a small positive expectancy, executed consistently, compounds significantly.
3. R-Multiple Distribution
Track every trade as an R-multiple (how many times your risk did you make/lose). A healthy R-multiple distribution shows:
- Most losses are around −1R
- Winners cluster between +1R and +3R
- Occasional outlier winners (the trades that make your month)
4. Maximum Drawdown
How far did your equity drop from its peak before recovering? A drawdown above 15% on a single account is a warning sign your risk management needs attention.
5. Win Rate by Condition
Break your win rate down by setup type, session, and day of week. You'll discover your overall win rate is hiding massive variance between your best and worst conditions.
Track these five metrics for 60 days and your trading will never be the same.
Track all five metrics automatically with Tradapt.