Is a 60% win rate good? The more accurate answer is: it depends on what happens during the other 40%.
Win rate explained
Win rate is Winning Trades divided by Total Trades times 100. But two traders with identical 55% win rates can have completely different results based on the size of their wins and losses. Trader A averages $200 on winners and loses $100 on losers. Trader B averages $100 on winners and loses $250 on losers. Their win rates tell the same story. Their bank accounts do not.
Can you make money with a 40% win rate?
Yes. A strategy can be profitable with a low win rate if winners are sufficiently larger than losers. A high win rate can lose money if occasional losses are very large. The win rate percentage alone tells you almost nothing without knowing the magnitude of wins and losses.
What is a good win rate?
There is no universal number. A good win rate is one that combined with the magnitude of wins and losses, costs and risk taken, produces positive results over a meaningful sample. Instead of asking only what your win rate is, ask what your win rate AND average winner AND average loser are together, then look at profit factor and expectancy.
Beware small samples
Winning seven of your first ten trades gives you a 70% win rate. It does not mean you have a 70% win rate strategy. The larger the sample, the more useful and meaningful the statistic becomes for evaluating your historical behavior.
Track win rate by setup
Your overall win rate might be 51% but breakouts could show 64% while reversals show 38%. The aggregate number was hiding valuable information. The same applies to time of day, instrument and long versus short positions.
Bottom line
A 45% win rate can be excellent. A 75% win rate can be terrible. The percentage only makes sense when you know what your wins and losses are worth. MyTraderScore calculates your win rate alongside the metrics that give that percentage actual context.
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