Understanding Win Rate & Profit Factor: What Really Matters

A signal service claiming “90% win rate” sounds impressive — until you realize their average win is $10 and their average loss is $100. Win rate alone is meaningless without context. Here's what you should actually look at.

Win Rate: The Starting Point

Win rate is simply the percentage of trades that close in profit. TrendRider's 71.1% win rate means that roughly 7 out of 10 trades hit at least one take-profit target. But this number only tells part of the story.

Profit Factor: The Real Metric

Profit factor = gross profit / gross loss. A profit factor of 1.0 means you're breaking even. Anything above 2.0 is considered excellent. TrendRider's profit factor of 2.09x means for every $1 lost, we make $2.09 in profit.

Maximum Drawdown: Risk Control

Drawdown measures the largest peak-to-trough decline in your account. Most retail traders experience 20-40% drawdowns. TrendRider's max drawdown of 1.81% is exceptionally low because of strict 6% stop-loss per trade and never risking more than 2% of portfolio per position.

SQN Score: System Quality

The System Quality Number (SQN), developed by Van Tharp, rates trading systems on a scale. Scores above 2.5 are “good,” above 3.0 are “excellent.” TrendRider's SQN of 3.02 places it in the “excellent” category.

The Complete Picture