FX Trading Operation Room — Using data accumulated since 2008 to eliminate the causes of beginners’ mistakes in FX! — Episode 14: Do not judge by win rate alone [FX Strategy.com]

This article is a reproduction and remodification of an article from FX攻略.com October 2018 issue. Please note that the market information written in the main text may differ from the current market.

Judging by win rate alone is incredibly dangerous

In professional baseball, the champion is decided by win rate. It is not about how many wins, but the team with the highest win rate over the season that becomes the champion.

But the same thing does not apply to FX. The method with the highest win rate is not necessarily the method with the most profit.

This is because, in baseball, one win is always just one win, but in FX, the amount earned from the same single win is not the same. There are both almost-draw tiny wins and valuable wins where you can gain hundreds of pips at once.

Even if you win 9 trades in a row with a +1 pip, if you have a -10 pips on the 10th trade, your total profit is negative. This single example shows that judging a method by win rate alone is dangerous. Win rate is merely the proportion of trades that ended with a small positive net result.