# Welcome to Investing

## Lessons 4: Win Rate

**Win Rate**

If Risk and Reward are methods that help traders plan their trades to protect themselves from risk. One thing that traders should be aware of is the Win Rate, a tool to measure traders' effectiveness in finding the winning rate in trading.

**What is Win Rate?**

Win Rate is the winning percentage from trading once and is used to measure a trader's performance or accuracy.

However, having a high win rate does not necessarily mean you will be a successful trader or will always make a profit. This is because the Win Rate only measures the accuracy of exiting positions if closed with a profit and shows the total number of winning trades you have. For example, if you trade 10 times and win 6 times, your Win Rate is 60%.

**In general, successful traders will try to balance the Win Rate and Risk Reward Ratio.**

**- A low Win Rate but a high Risk Reward Ratio **indicates that these traders are more likely to accept higher risk in order to get a higher chance of making a profit.

**- A high Win Rate but a low-Risk Reward Ratio** indicates that these traders focus more on limiting risk and generating consistent returns.

**Why is the Win Rate high but the Risk Reward Ratio low? **

**High Win Rate but Low-Risk Reward Ratio.**

Some traders achieve a high Win Rate of 60% out of 100 trades. However, their Risk Reward Ratio for each trade might be 1:0.5, meaning they risk 1 time for a potential reward of 0.5 times. This indicates that the trader focuses on short-term trades, closing positions immediately upon gaining a profit. As a result, their Win Rate is higher than their overall profit.

**Why is the Win Rate low but the Risk Reward Ratio high?**

**Low Win Rate but High-Risk Reward Ratio.**

Some traders achieve a low Win Rate of 40% out of 100 trades. However, their Risk Reward Ratio for each trade might be 1:5, meaning they risk 1 time for a potential reward of 5 times.

For instance, they might experience 60 losses of $100 each (totaling $6,000) and gain 40 profits of $500 each (totaling $20,000). This suggests that the trader prioritizes long-term trades to secure substantial profits, resulting in a lower Win Rate than their overall profit.

**Take an example from the original table to calculate Win Rate for each asset.**

Group |
Asset |
RRR |
Win Rate |

Group 1 | BTC/USD | 1:0.5 | 67% |

Group 2 | CAD/JPY | 1:1 | 50% |

Group 3 | AAPL | 1:5 | 17% |

**For example,** from trading AAPL, the Win Rate can be calculated as follows.

**Formula:**

Minimum Winrate = 1 / (1 + Reward:Risk) x 100

Minimum Winrate = 1 / (1 + 5) x100

Minimum Winrate = 1 / (6) x100

Minimum Winrate = 0.166 x100

Minimum Winrate = 16.6% or 17% approximately.

And if traders want to measure the performance of all traders' portfolios, such as a trader's portfolio has 100 trades, 50 wins, and 50 losses.

Traders can use the following formula to calculate:

**Formula:**

** **% Win Rate = Number of winning trades / Total number of trades x 100

% Win Rate = 50 / 50 x100

% Win Rate = 0.5 x 100

% Win Rate = 50%

Win Rate and Risk Reward Ratio are commonly used tools by traders to assess risk and measure trading performance. Win Rate measures a trader's ability to win trades, while the Risk-Reward Ratio evaluates an asset's investment worthiness and enables systematic trading planning. Successful traders often use the Win Rate and Risk Reward Ratio to evaluate their effectiveness.

#### Course Content

- 1
## What is IUX?

10min - 2
## Types of Investment

10min - 4
## Win Rate

10min - 5
- 6
## Types of CFD Broker

10min