Seven Wins, Still Red: Why Win Rate Lies#

You won 7 trades and lost only 3. And your account is still down. Here is why, and what to do about it.

1. Count rupees, not green rows#

Win rate alone tells you nothing. What matters is how much you make when you win versus how much you lose when you lose.

A 70% win rate, and still a loss of about ₹100 per trade, before brokerage and taxes.

2. The quick formula: expectancy#

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Expectancy per trade = (Win rate × Avg win) − (Loss rate × Avg loss) − Costs
                     = (0.7 × 500) − (0.3 × 1500) − costs
                     = 350 − 450 − costs  =  −100 − costs

If this number is negative, more trades only means more losses.

3. The tempting fix: "I'll just make my stop loss smaller"#

It sounds like simple maths: halve the loss, keep the wins. But it does not work that way.

• A tighter stop gets hit more often. Some of those 7 winners dipped before they worked; now they become losers.
• Gaps and slippage can make real losses bigger than the stop you planned.
• So you have not just changed the loss size. You have changed the strategy.

4. What to do instead#

1. Log four numbers together for every strategy: win rate, average realised win, average realised loss, and costs (brokerage, taxes, charges).
2. Change one rule at a time. Stop, target, entry: any change makes a new strategy.
3. Retest the whole thing on past data before trading it live. Don't just edit the losing column.
4. Don't trust 10 trades. A small sample is not proof of an edge. Look at many trades across different market conditions.

5. Backtest it properly#

TradingLead lets you chart, replay and backtest your strategy on real Indian market data, so you can see the real expectancy before risking money.

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Educational content only. The numbers above are a fictional example, not investment advice. Trading involves risk, including loss of capital.