![]() We can deduce from a 15% Break-even Rate and a 55% Win rate that the Loss Rate is only 20%, while for a system with no break-even trades, the Loss Rate is 45%. If we were to compare two systems with an equal Win Rate of 55%, this figure would be of utmost importance if one of the system would have a Break-even rate of 0% and the other one of 15%. This is the percentage of break-even trades in a trading report, the proportion of trades that were neither winning nor losing trades.īreak-even Rate = Number of Break-even Trades X 100 / Total Number of Trades This is not a very common statistical measure but nonetheless very useful. Loss Rate = Number of Loss Trades X 100 / Total Number of Trades In trading, there are not only winning and losing trades but also break-even trades. It is important to know that this number does not derive automatically from the above by subtracting that one from 100%. This is the percentage of unprofitable trades in a trading report. But in any case, a 5:2 Risk-to-Reward Ratio provides a positive baseline probability. This doesn't mean the system would make money, because even with a 70% Win Rate it would result in a break-even or losing system because of the impact of spreads and slippage. A system entering a trade based on coin toss heads for short and tails for long, each day at 10:30am, with a Stop Loss of 50 pips and a Take Profit of 20 pips, will hit the Take Profit more times than the Stop Loss. On a random entry method with no edge - for instance, a “coin toss” approach, - the Win Rate will directly be in line with the Risk-to-Reward Ratio. Win Rate = Number of Profit Trades X 100 / Total Number of Trades It’s simply the number of winning trades expressed as a percentage of the total number of trades. This figure, sometimes referred to as Success Rate or Profitability, has to do with the reliability of the trading method. The percentage of profitable trades, the Win Rate, is another statistic that many traders use to gauge performance success. A proper use of leverage can only be done if the trading edges are well measured. Stability is the key to improve performance through money management strategies. These figures aim to evaluate the robustness and stability of a trading system or strategy by calculating statistics based on less complex figures.
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