When traders talk results, they usually lead with a win rate: “I win 60% of my trades.” That sounds great, but it doesn’t tell you if the account is actually growing. What matters is how big your winners are compared to your losers, and how your account bounces back after a rough patch. This post breaks those ideas down in simple terms you can use right away.
Imagine flipping a coin. If you win, you make $50. If you lose, you drop $120. Even if you “win” most flips, the math still works against you. Trading can be the same. A nice-looking win rate can hide the fact that your average loss is bigger than your average win. The goal isn’t just to be right often—it’s to make more on your winners than you give back on your losers.
Ask: “On average, what do I make per trade?” That’s it. Look at your last few dozen trades. Add up your winners and divide by how many wins—that’s your average win. Do the same for your losses. If your average win is larger than your average loss—and you’re not losing way more often than you win—you’re on solid ground. If not, something needs adjusting.
Most traders set clear stop losses but fuzzy targets. That’s backwards. Before you enter, decide what a “good” outcome looks like on the actual chart: prior highs or lows, a level the market respects, or a place you’d be happy to take profit. If you risk $100, try to aim for $200 or more when the setup allows. Smaller targets are fine on quick mean-reversion trades—just keep the losses smaller too. The point is to choose the payoff up front, not after you’re in the trade.
Every strategy has losing streaks. Two things matter: how deep the dip gets, and how long it takes to climb out. A 10% slide that recovers in a week is one thing; a 20% slide that lingers for months is another. If the ride is rougher than you can emotionally handle, you won’t stick with it. Adjust your position size and profit targets until the ups and downs feel manageable for you.
Wins and losses tend to arrive in clusters. That’s normal. Protect yourself with simple rules: risk a small, steady slice of your account on each trade (many traders use around half a percent to one percent), and set a daily or weekly loss limit that tells you to stop for the day. The goal is to stay in the game long enough for your edge to show up.
Export your last 50–100 trades. Write down your average win, average loss, and win rate. Now be curious: which setups or times of day actually make money for you, and which quietly drain it? Keep the good buckets, fix or drop the bad ones. As a final test, assume your losses were a bit bigger or your slippage was worse—would you still be happy with the results?
A pretty win rate can fool you. What counts is the money left after the dust settles: bigger average wins than losses, dips you can sit through, and a plan you can follow on good days and bad. Keep it simple, measure what matters, and let the numbers guide your next tweak.
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