Risk and psychology
Hit rate (win rate)
Definition
The share of trades that close with a profit, W. On its own it says nothing about profitability.
Example
Say method A wins 7 trades out of 10, but its winners average +0.5R and its losers −1.5R: 0.7 × 0.5 − 0.3 × 1.5 = −0.10R per trade. Method B wins only 2 trades out of 10, yet at +5R per win and −1R per loss it averages 0.2 × 5 − 0.8 × 1 = +0.20R. The method that wins more often is the one that loses money.
Hypothetical numbers, for illustration only.
UpTickFlow is our product. These guides are education, not financial advice. Trading involves a substantial risk of loss.