Win Rate is the percentage of closed trades that finished in profit. It is the most quoted statistic in trading and the most misleading one when read alone, because it says nothing about how big the wins were relative to the losses. A system with a 90% win rate can still bankrupt an account if the 10% of losers are large enough to wipe out all the small wins. Win Rate is only meaningful when paired with average win size, average loss size, or risk-reward ratio.
Formula
Win Rate = (Number of Winning Trades / Total Closed Trades) × 100
Breakeven trades are typically excluded from both the numerator and denominator, or counted in a separate bucket. Open trades are not counted.
Worked example
You closed 80 trades last quarter. 48 finished in profit, 30 were losses, and 2 closed exactly at breakeven.
Win Rate = (48 / (48 + 30)) × 100 = (48 / 78) × 100 = 61.5%
That looks strong, but suppose your average win was $80 and your average loss was $200. Net result: (48 × $80) − (30 × $200) = $3,840 − $6,000 = −$2,160. A 61.5% win rate produced a losing quarter.
Why it matters
Many traders chase high win rates by setting wide stops and tight targets, which feels good but creates fragile equity curves where one large loss erases weeks of small wins. The Trader+AI journal shows win rate next to average R-Multiple precisely so you cannot read one without the other.
Common pitfalls
High win rate does not equal profitability. Anyone selling a strategy with "92% win rate" as the headline is hiding the loss size. Also beware of survivorship bias in your own journal: closed-by-stop trades are losses; closed-manually-because-it-looked-bad trades are usually losses too — make sure both are counted.