Win rate

Win rate is the share of a strategy’s trades that finished in profit, expressed as a percentage. If forty of every hundred trades made money, the win rate is forty percent. It is one of the most intuitive performance numbers, and also one of the most misunderstood.

The misunderstanding is treating a high win rate as the goal. It is not. A strategy can win a large majority of its trades and still lose money overall if its occasional losses are huge, and a strategy can win well under half its trades and be very profitable if its wins are much larger than its losses. Trend-following systems often have modest win rates for exactly this reason: they take many small losses while waiting for a few large gains.

This is why Crypto Wealth always reports win rate next to profit factor and drawdown. Alone, win rate tells you how often a system is right. Only together do the numbers tell you whether being right that often actually pays.