Beginners chase a high win rate. Professionals do not. Here is why.
The trap
Imagine a system that wins 9 times out of 10. Sounds great. But each win makes you 0.2 times your risk, and the one loss costs you 5 times your risk. Over ten trades you make 1.8 and lose 5. You are down, with a 90 percent win rate.
The number that matters: expectancy
Expectancy is the average result per trade, counting wins and losses together. It answers the only question that matters: if I do this many times, do I come out ahead.
- A modest win rate with big winners and small losers can be very profitable.
- A high win rate with small winners and big losers quietly drains your account.
Reward to risk is half the story
Along with expectancy, look at reward to risk: how much you aim to make versus what you risk. If your winners are twice your losers, you can be right less than half the time and still grow your account.
This is why, at Smart Trade, we show expectancy and a confidence interval on our track record, not a headline win rate. A single big number would be misleading, and we would rather be honest.
Learn how we judge our own predictions on the methodology page, and never take a number at face value again.