Win/Loss Ratio

AAA

DEFINITION of 'Win/Loss Ratio'

A ratio of the total number of winning trades to the number of losing trades. It does not take into account how much was won or lost simply if they were winners or losers.

Win/Loss Ratio = Winning Trades : Losing Trades

The win/loss ratio is also known as the "success ratio".

INVESTOPEDIA EXPLAINS 'Win/Loss Ratio'

For example, if you made 30 trades and of them 12 were winners 18 were losers, your win/loss ratio would be 2:3. Your probability of success would be 40%.

The win/loss ratio is used in calculating the risk/reward ratio. It is not very useful on its own because it does not take into account the monetary value won or lost in each trade. For example, a win/loss ratio of 2:1, means the trader has twice as many winning trades than losing. Sounds good, but if the losing trades have dollar losses three-times as large as the dollar gains of the winning trades, the trader has a losing strategy.

RELATED TERMS
  1. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  2. Zero-One Integer Programming

    An analytical method consisting of what amounts to a series of ...
  3. Close Position

    Executing a security transaction that is the exact opposite of ...
  4. Trade

    A basic economic concept that involves multiple parties participating ...
  5. Stock

    A type of security that signifies ownership in a corporation ...
  6. Online Trading

    The act of placing buy/sell orders for financial securities and/or ...
Related Articles
  1. Understanding The Sharpe Ratio
    Bonds & Fixed Income

    Understanding The Sharpe Ratio

  2. Four-Week Rule Boosts Winning Trades
    Trading Systems & Software

    Four-Week Rule Boosts Winning Trades

  3. Losing To Win
    Options & Futures

    Losing To Win

  4. Money Management Using The Kelly Criterion
    Active Trading Fundamentals

    Money Management Using The Kelly Criterion

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center