Win rate vs expectancy: why 74% winners can still lose money

A high win rate means little if the losses are bigger than the wins. Here is the math every bot builder should know.

The trap

A desk that wins 74% of its trades sounds great. But if each loss is four times bigger than each win, it loses money. Win rate alone tells you nothing.

Expectancy

Expectancy = (win rate × average win) − (loss rate × average loss) − costs per trade. If it is not positive after costs, the strategy loses money over time, whatever the win rate.

Costs eat tiny targets

Spread and commission are paid on every trade. With a target of a few dollars and a cost of several dollars, even a very high win rate cannot make money.

What the course does

Targets of at least 4× the stop (1:4), one shot per setup, and a strategy is only promoted after 40 practice rounds with a profit factor of 1.5 or more.