[Readable in 3 minutes・Learnable practical investment course｜Lecture 3: Read trading performance in four numbers]
Today's Conclusion
The report is read by four figures: win rate, PF, expectancy, and maximum drawdown.
None of these alone decides the quality of a method.
"100万円 in one year" reveals nothing
"Profits of 1 million yen in one year with this method." This is a common way of writing.
But this alone cannot be used to judge. Is the principal 1 million yen or 100 million yen? How much did it drop along the way? How many trades were made? The amount of profit is only the entrance to the performance report.
What to look at: these four
| Numbers | What you can understand | One-liner when viewing |
| Win rate | How many times out of how many you win | This alone is meaningless (previous) |
| PF | Total wins ÷ total losses | If it exceeds 1, there is profit remaining |
| Expectancy | How much you average increase or decrease per trade | If negative, the more you trade, the more you lose |
| Maximum DD | From the highest point of capital to the largest decline | Whether it’s within what you can endure |
Win rate, PF, and expectancy express "how much you can earn," while maximum drawdown expresses "how painful it can be." Even if the first three are excellent, it’s dangerous if the last one isn’t visible.
The same profit can have completely different contents
Suppose you start with 1 million yen and two methods end up with 1.5 million yen after one year.
| Method C | Method D | |
| Funds after one year | 150万円 | 150万円 |
| Maximum drawdown | 10% | 45% |
If you look only at the results, they seem the same. However, the person who used D went through a phase where the capital nearly halved.
Honestly, I think many people cannot continue to trust the method at that point. Most quit around the bottom. If that happens, the performance for that person becomes "−45%."
Another thing: don’t forget to look at the number of trades. A result of 10 or 20 trades cannot be distinguished from luck. This topic will be covered in detail in a later course.
Today's Check
Open the performance report of a method or product you’re curious about and verify that the four numbers are present.
If any numbers are missing, think about why they are not written, and you’ll discover something.
Next time
Next time is “What PF (Profit Factor) is.” Among the four, we will delve into the number that most directly expresses a method’s earning power.
TSUBAKURO's Four Numbers
The TradingView strategy I sell, "TSUBAKURO," also lists these four on its product page. In the backtest of XAUUSD on a 1-hour chart (January 2025–October 2026, 39 trades, 1% of capital per trade), the results were as follows.
Win rate 56.4% / PF 2.56 / Expectancy +$75 per trade / Maximum drawdown 5.3%
Considering that there were only 39 trades, please treat this as a reference. It is based on historical data, so results may not repeat in the future.
※This article is intended to provide information that may aid investment decisions and does not recommend buying or selling any specific financial product. The numerical values in the article are for illustration and do not guarantee future results. In margin trading such as FX or CFDs, there is a risk of losses exceeding the principal. Please make investment decisions at your own responsibility.