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The fraction of trades or periods that made money. Misleading without context.
Win rate is the fraction of trades or periods that were profitable. A 60% win rate means 60 of every 100 trades made money. It is closely related to batting average (which compares to a benchmark rather than zero) and is widely misused — high win rate alone says nothing about overall profitability.
Win Rate = winning periods / total periodsWin Rate = (winning periods) / (total periods)Counts only. A win is any positive return, regardless of size.
Win rate alone is misleading. A strategy with 90% win rate that gives back 12 months of small gains in one bad month is not a good strategy. Always pair win rate with gain/loss ratio or profit factor to see the full picture.
Famous example: selling out-of-the-money options has a 95% win rate but is mathematically picking up nickels in front of a steamroller. Most "income" strategies have this profile.
Over 250 trading days, 145 were positive and 105 were negative or flat.
Win Rate = 145/250 = 58%
Sounds good — but without gain/loss ratio context, it tells you nothing about whether the strategy actually made money overall.
Win rate ranges by strategy type:
| Strategy | Typical Win Rate |
|---|---|
| Mean reversion | 55–70% |
| Buy and hold equity | 55–60% (monthly) |
| Trend following | 35–45% |
| Premium selling | 80–95% (warning sign) |
Batting Average · Gain/Loss Ratio · Profit Factor · Skewness
Not always. High win rate often comes with negative skew (frequent small wins, occasional big losses). Look at win rate AND gain/loss ratio together.
Win rate uses zero as the reference (positive return = win). Batting average uses a benchmark (above benchmark = win). Same math, different reference points.
High win rate strategies tend to have negative skew. Low win rate strategies (trend following) tend to have positive skew.
Yes — in the timing section, alongside batting average and gain/loss ratio.
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