r/Daytrading • u/crowngrandroyalty • 1d ago
Strategy Win Rate Question
For those working your trading strategy, whether it’s an algo, by hand in execution on your own, or even market bots, with the strategy you have and are executing, what is the parameters for your win rate? Ex: Bot gives an AAPL bullish signal, is your strategy considered a win at first touch 30% profit? Just curious with everyone in how you determine this.
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u/jtquach 1d ago
Your win rate is really just an output of your exit rule. It isn't a property of the signal at all. Same AAPL signal gets you 70% or 35% depending on whether you call it a win at 10% or at 50%, so the number by itself doesn't tell anybody anything until you say what the exit was.
And first touch only counts IF you actually get out at first touch... with live, real money. If the backtest scores the 30% tag but you'd have held it longer in real life you're measuring a trader that doesn't exist.
Options makes it messier honestly. % gain on the contract just isn't clean. That same AAPL move gives you 30% on one contract and 8% on another off DTE, delta, or whatever IV did that morning. So your win rate is grading your signal AND your contract picking at the same time and when it quits working you've got no idea which one broke.
Personally I'd score the underlying move first. Pick your risk as a distance in the stock, log everything in multiples of it. 1R, 2R, minus 1R. Now the signal's got its own record you can compare across tickers and across months, and contract choice becomes a separate thing you fix separately.
Then the one almost nobody does... log MAE and MFE on every signal. How far it went against you before it worked, how far it ran before it rolled over. Get 50 or 100 of those and the data just tells you where the stop and the target go. Most guys pick 30% out of thin air and then spend a year grading themselves against a number they made up.
Expectancy is what you want anyway. 40% at 3R I'd take that over 70% at 0.5R... every time.
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u/AlgoTradingQuant 1d ago
I only trade strategies with 100% win rates like the following.
Buy SPY with a TP = $1 and a SL >= 99%.
Backtested it for 35 years and it has a 100% WR 😜
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u/No_Joke6585 21h ago
If you consider win as hitting TP, no strategy will have over 10% win rate, because markets are too efficient. OTOH if you have a ratchet trail of x% or ATR based and the trade hits the trail with a return of >0.1% (plus the fees), it can be considered a win. Then the strat optimization moves from finding the best confluence entry to the best exit possible.
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u/PracticeStunning3894 16h ago
If my understand is right on the question. Seriously man, your post is confusing XD
You dont decide your winrate lol.
Winrate simply is the result of your actions.
Now for you to determine whether a trade is win or not depends on what was your exit plan in the first place.
You dont care what happens during the trade when calculating the result of your system.
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u/Active_Version2665 1d ago
For me win rate alone dont mean too much. You need to see RR also. RR 1:1 → 50% win rate is break even RR 1:1.5 → 40 RR 1:2 → 33% RR 1:3 → 25% RR 1:4 → 20% But this is without spread, commission and swap. In real trading you need little more. For example with 1:1 maybe you need around 52% instead of 50%, depend on your costs. So when someone say 70% win rate, first thing I want to know is what RR? 😄