Advanced · Lesson 6 of 9 · 7 min read
Your numbers
Win rate on its own tells you very little. A few simple numbers show whether you really have an edge, and what to fix if you do not.
The numbers that matter
| Number | What it tells you | How to work it out |
|---|---|---|
| Win rate | How often you win | Winning trades ÷ all trades |
| Average winner and loser | Your typical win and loss, in R | Total R from winners ÷ number of winners (and the same for losers) |
| Expectancy | What you make on an average trade, in R | (Win rate × average win) − (loss rate × average loss) |
| Win rate needed to break even | The lowest win rate that still breaks even | Average loss ÷ (average win + average loss) |
| Profit factor | How much you win for every £1 you lose | Total won ÷ total lost |
| Drawdown | The biggest fall from a high point | From a peak to the lowest point after it |
Expectancy is the number that matters most. A low win rate can make money if the winners are big. A high win rate can lose money if the losers are bigger.
Trader A wins 45% of trades, with an average win of 1.6R and an average loss of 1R. Expectancy = 0.45 × 1.6 − 0.55 × 1 = +0.17R a trade. They only need to win about 38% to break even.
Trader B wins 60%, but the average win is only 0.8R. Expectancy = 0.6 × 0.8 − 0.4 × 1 = +0.08R, and they need 56% just to break even. Trader A makes about twice as much per trade while winning less often.
Reading your journal
BTM’s journal works these out for you: win rate, average winner and loser, expectancy per trade, the win rate needed to break even, and drawdown. A few tips:
- Wait for at least 30 to 50 trades before reading much into them.
- Keep practice and live trades separate.
- Look at your numbers for each setup and each session if you can: the weak spots usually show up there.
- Make sure costs are included, or the numbers will look better than reality.
Common mistakes
- Chasing a high win rate at the cost of tiny winners.
- Judging a strategy after 10 trades.
- Leaving costs out.
- Mixing practice and live results together.
Check yourself
1. You win 50% of trades, with an average win of 1.5R and an average loss of 1R. What is your expectancy?
0.5 × 1.5 − 0.5 × 1 = +0.25R a trade.
2. Your average win is 2R and average loss 1R. What win rate do you need to break even?
1 ÷ (2 + 1) = about 33%.
3. Which number matters most?
Expectancy.
Try it on BTM
For education only, not financial advice. Trading carries a high risk of losing money, especially with leverage. Only trade with money you can afford to lose.
For educational purposes only. Nothing here is financial advice. Past performance does not guarantee future results, and trading carries a high risk of losing money, so only trade with money you can afford to lose. Read the risk warning.