Win Rate

Win rate is the percentage of trades that close in profit out of all trades taken, calculated as winning trades divided by total trades. A strategy that won 55 of 100 trades has a 55% win rate. It is the most quoted statistic in any backtest report — and, on its own, one of the least meaningful, because it says nothing about how big the wins and losses were.

Example

Win rate = winning trades ÷ total trades × 100

Two hypothetical intraday NIFTY strategies over 200 trades each:

• Strategy A: 70% win rate, average win ₹800, average loss ₹2,500. Expectancy = (0.70 × 800) − (0.30 × 2,500) = 560 − 750 = −₹190 per trade. It loses money.
• Strategy B: 40% win rate, average win ₹2,600, average loss ₹1,000. Expectancy = (0.40 × 2,600) − (0.60 × 1,000) = 1,040 − 600 = +₹440 per trade. It makes money while losing more often than it wins.

The pairing of win rate with the risk-reward ratio — not either number alone — determines profitability.

Why it matters

Win rate does shape the experience of trading a system. Strategy B above is profitable but spends long stretches losing; a 40% win rate means streaks of five or six consecutive losses are routine, which drives the drawdowns that tempt traders to abandon working strategies. Systematic traders choose win-rate profiles they can psychologically survive, then verify expectancy over hundreds of backtested trades.

In INDfolio AI, win rate, average win/loss and expectancy appear together in every backtest report — see Backtesting.