A trader with a 40% win rate can outperform a trader with a 70% win rate. Most people hear that and assume it's a trick. It isn't.
Win rate answers one question: how often are you right. It says nothing about the only question that actually determines whether an account grows, which is how much gets made when you're right versus how much gets lost when you're wrong.
A 70% win rate built on taking small, nervous profits and letting losses run will bleed an account slowly, one string of good-looking green months followed by one red month that erases all of them. A 40% win rate built on cutting losses fast and letting winners run can be wildly profitable, because the math only needs three good trades to outweigh seven small ones.
This is why watching someone's win rate in isolation tells you almost nothing about whether they're a good trader. Two traders can both be right 60% of the time and have completely opposite outcomes, because one of them is right small and wrong big, and the other is right big and wrong small.
The number that actually matters is expectancy. Average win, multiplied by win rate, minus average loss, multiplied by loss rate. That single number tells you what a strategy is worth over a hundred trades. Win rate alone doesn't even get close.
Image: A trading sheet where a trader had a clean run of profitable trades, only for one trade to wipe out a large part of those gains.
Stop asking how often you're right. Start asking what being right is actually worth.
$BTC
$ETH
$SPCX
Win rate answers one question: how often are you right. It says nothing about the only question that actually determines whether an account grows, which is how much gets made when you're right versus how much gets lost when you're wrong.
A 70% win rate built on taking small, nervous profits and letting losses run will bleed an account slowly, one string of good-looking green months followed by one red month that erases all of them. A 40% win rate built on cutting losses fast and letting winners run can be wildly profitable, because the math only needs three good trades to outweigh seven small ones.
This is why watching someone's win rate in isolation tells you almost nothing about whether they're a good trader. Two traders can both be right 60% of the time and have completely opposite outcomes, because one of them is right small and wrong big, and the other is right big and wrong small.
The number that actually matters is expectancy. Average win, multiplied by win rate, minus average loss, multiplied by loss rate. That single number tells you what a strategy is worth over a hundred trades. Win rate alone doesn't even get close.
Image: A trading sheet where a trader had a clean run of profitable trades, only for one trade to wipe out a large part of those gains.
Stop asking how often you're right. Start asking what being right is actually worth.
$BTC
$ETH
$SPCX
