The percentage of trades in a trading system or strategy that result in a profit, calculated by dividing the number of winning trades by the total number of trades. While win rate is an important performance metric, it must be evaluated alongside the average win size relative to the average loss size (reward-to-risk ratio) to determine overall profitability. A strategy with a low win rate can still be highly profitable if the winning trades are significantly larger than the losing trades.
Example
“The trend-following system had a win rate of just 35%, but its average winner was 3.5 times the size of its average loser, resulting in consistent overall profitability.”