Traders obsess over win rate, but a high win rate can still lose money and a low one can be hugely profitable. To know whether a strategy actually works you need three numbers together: win rate, profit factor and expectancy. Here is what each means and how they connect.
Win rate
Win rate is simply the percentage of your trades that are profitable: winning trades divided by total trades. A 60% win rate means 6 of every 10 trades make money.
On its own it is almost meaningless, because it says nothing about how big the wins and losses are. A 90% win rate where the occasional loss wipes out nine wins is a losing strategy.
The payoff ratio and R-multiples
The other half of the picture is how much you win when you win versus how much you lose when you lose. The cleanest way to express this is in "R" — multiples of your initial risk. If you risk $100 and make $250, that is +2.5R; if you are stopped out, that is −1R.
Thinking in R makes trades comparable regardless of size and is the foundation of expectancy.
Profit factor
Profit factor is gross profit divided by gross loss across all your trades. A profit factor of 1.0 breaks even; above 1.0 is profitable; 1.5–2.0 is generally considered solid, and much above that is rare over a large sample.
It is a quick, intuitive health check: "for every dollar I lost, how many did I make?"
Expectancy — the number that ties it together
Expectancy is the average amount you can expect to make per trade, combining win rate and payoff. A common formula is: (win rate × average win) − (loss rate × average loss).
If your expectancy is positive, the strategy makes money over a large enough sample — even with a low win rate. A system that wins 40% of the time but makes 3R on winners and loses 1R on losers has a strongly positive expectancy. This is why "be right less often, but win big when you are right" works.
Use all three together
Win rate, payoff and profit factor are the inputs; expectancy is the bottom line. Track them across a large sample of trades — from a backtest, replay session or your live journal — and watch the trend rather than any single trade.
Secuora calculates win rate, profit factor, average win/loss and expectancy automatically from your journaled and replayed trades, so you can see the full picture without a spreadsheet.
Frequently asked questions
What is a good profit factor?
A profit factor above 1.0 is profitable. Roughly 1.5–2.0 is generally considered solid over a meaningful sample of trades; sustained values far above that are rare and worth double-checking for overfitting or too few trades.
Can a strategy with a low win rate be profitable?
Yes. If your winners are much larger than your losers, a win rate well below 50% can still have strongly positive expectancy. Trend-following systems often win under 40% of trades yet make money.
What is expectancy in trading?
Expectancy is the average profit or loss you can expect per trade, combining win rate with average win and loss size. Positive expectancy means the strategy makes money over a large enough sample.