What Is a Trading Win Rate?
A win rate is the percentage of trades that closed in profit. On its own it says nothing about whether a strategy makes money, because a 90% win rate at a 0.1:1 payoff ratio loses and a 35% win rate at 3:1 is comfortably profitable.
What is the breakeven win rate?
For a payoff ratio R (average win ÷ average loss), breakeven is 1 ÷ (1 + R):
| Payoff ratio | Breakeven win rate |
|---|---|
| 3.0 : 1 | 25.0% |
| 2.0 : 1 | 33.3% |
| 1.5 : 1 | 40.0% |
| 1.0 : 1 | 50.0% |
| 0.5 : 1 | 66.7% |
| 0.1 : 1 | 90.9% |
So a win rate is only interpretable next to the number it is usually quoted without.
What win rates are realistic?
Most discretionary directional strategies resolve against the trader 30% to 60% of the time. Sustained rates above roughly 80% do exist, in market making and premium selling, and they are paid for with payoff ratios well below 1 and occasional very large losses.
How does a win rate get inflated?
Scratches counted as wins. A $3 profit on a $5,000 position is a win in the count and nothing in the money.
Losers left open. If the denominator is closed trades only, a losing position held indefinitely is never counted.
Averaging down. Adding to a loser until the average price is beaten converts losses into wins, one at a time, while the risk grows.
Partial exits counted separately. One entry scaled out four times becomes four wins; the same trade closed at a loss is one loss.
What should you look at instead?
Expectancy — (win rate × average win) − (loss rate × average loss) — which combines both inputs into the number that actually decides. A 60% win rate with a 1:1 payoff gives 0.6 × 1 − 0.4 × 1 = +0.20R per trade. A 40% win rate at 2.5:1 gives 0.4 × 2.5 − 0.6 × 1 = +0.40R, twice as good.
And check the sample. At 50 trades the standard error on a 55% win rate is 7.0 percentage points, so the true rate might be anywhere from 41% to 69%.
How does this connect to a track record?
There is a reason a self-reported win rate skews high even when nobody is lying. Odean found across 10,000 brokerage accounts that investors realise gains far more readily than losses,[1] so at any moment the closed trades are disproportionately winners and the open ones disproportionately losers. A win rate computed on closed trades inherits that directly.
The behaviour has a name. Shefrin and Statman called it the disposition effect in 1985: winners are closed early and losers held open.[2] What is missing then does the rest — the positions still open are mostly the bad ones and they are not in the number, which is survivorship bias, measured on fund performance in 1992.[3]
A metric is a summary of a record, so it inherits every weakness of that record. Computed from trades selected after the fact, it is a number about the selection. kappi commits each trade before it resolves and publishes it on a Merkle-anchored log, so PnL, RME, correlation to SPX, mean R:R and trade count over 30, 100 and 200-day windows are computed over everything that was committed, losses included. $15/month to keep a record; reading one is free.
Sources
- Odean, 'Are Investors Reluctant to Realize Their Losses?', Journal of Finance 53(5), 1998, 1775–1798 read 2026-08-16
- Shefrin & Statman, 'The Disposition to Sell Winners Too Early and Ride Losers Too Long', Journal of Finance 40(3), 1985, 777–790 read 2026-08-16
- Brown, Goetzmann, Ibbotson & Ross, 'Survivorship Bias in Performance Studies', Review of Financial Studies 5(4), 1992, 553–580 read 2026-08-16
Frequently asked questions
What is a good win rate in trading?
There is no good win rate without a payoff ratio. Breakeven is 1/(1+R): 1 trade in 4 at 3:1, 1 in 3 at 2:1, half at 1:1, 2 in 3 at 0.5:1. A 35% win rate at 3:1 beats a 65% win rate at 0.5:1.
Is a 90% win rate possible in trading?
Yes, in market making and premium selling, which pay for it with payoff ratios well under 1 and rare large losses. A 90% win rate at 0.1:1 actually loses money.
How is a win rate inflated?
By counting scratches as wins, excluding losing positions that are still open, averaging down until trades close green, and counting each partial exit as its own winning trade.
What should I look at instead of win rate?
Expectancy, which combines win rate with average win and average loss into the per-trade number that decides profitability, and the sample size the whole thing was computed over.