Can a High Win Rate Hide a Weak Trading Strategy?
Explain how average win size, average loss size, and trading costs affect expectancy.
Question: Which performance metric do you find more useful than win rate alone?
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Prop Firm BridgeOfficial
Yes, an 85% win rate can easily hide a weak strategy if your average loss dwarfs your average win size. Expectancy is calculated as: (Win Probability x Average Win) - (Loss Probability x Average Loss). If trading costs like commissions and spreads are high, they eat directly into that edge, turning a paper profit into a real net loss.
Win Rate alone can deceive: A high win rate with poor risk-reward ratios means one black swan event can breach strict prop firm daily loss limits.
Profit Factor: Many traders find Profit Factor (gross profits divided by gross losses) far more useful than win rate alone because it immediately accounts for sizing.
Keep in mind that when trading evaluations, consistency rules and drawdown limits will catch up to negative expectancy systems very quickly, even if they win 9 out of 10 trades.
What performance metric do you rely on most before taking an evaluation?