What is the 'Win/Loss Ratio'
The win/loss ratio is 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".
BREAKING DOWN '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.