# Why an 80% Win Rate Can Still Lose Money

Source: https://www.tradicted.com/lessons/risk-management/win-rate/

---
A strategy that wins 8 trades in 10 can still lose $200 every 10 trades. It makes $100 on each win and loses $500 on each loss, so its two losses cost more than its eight wins make.

A strategy's edge is its average result per trade, also called its [expectancy](/learn/expectancy-in-trading/). It depends on both sides: how often the strategy wins, and how big each win and each loss is.

The free lesson on this page has you add up 10 trades for two made-up strategies, then runs each one across 100 traders.

## How do you work out what a strategy makes?

Add up every win and every loss over 10 trades, each at its own size.

| Strategy | Wins in 10 | A win | A loss | Every 10 trades |
|---|---|---|---|---|
| 6-in-10 | 6 | +$100 | −$100 | 6 × $100 − 4 × $100 = **+$200** |
| 8-in-10 | 8 | +$100 | −$500 | 8 × $100 − 2 × $500 = **−$200** |
| 3-in-10 | 3 | +$300 | −$100 | 3 × $300 − 7 × $100 = **+$200** |

The strategy that wins most often is the only one that loses money. One of its losses wipes out five wins.

![A row of ten trades: six wins of $100 and four losses of $100, with an Add them up button](https://www.tradicted.com/lessons-img/risk_l1-risk_l1_row-4334eb28.webp)

*The 6-in-10 strategy: ten trades to add up.*

The 3-in-10 strategy wins least and makes the same as the 6-in-10. It comes back in the next three lessons.

## Can 10 trades tell you if a strategy works?

No. Over 10 trades, a strategy that makes money often looks like one that loses, and the other way round.

The lesson gives each strategy to 100 traders and lets them trade on. The exact chances behind what you see:

| After | 6-in-10 (makes money): traders behind | 8-in-10 (loses money): traders ahead |
|---|---|---|
| 10 trades | 17% | 38% |
| 100 trades | 2% | 19% |
| 500 trades | almost none | 3% |

With the strategy that makes money, about 1 trader in 6 is behind after 10 trades. With the one that loses money, almost 4 in 10 are ahead. The lesson's 100 traders land near these numbers, a little differently each run.

![A row of ten trades: eight wins of $100 and two losses of $500, asking whether the strategy makes money](https://www.tradicted.com/lessons-img/risk_l1-risk_l1_sniper-1de43cf6.webp)

*The 8-in-10 strategy. Before you add it up: does it make money?*

Say you take 10 trades with the 6-in-10 strategy and end down $200. That tells you almost nothing about the strategy. Trading bigger to win it back only makes the next bad run hurt more.

## Is a high win rate or a big win better?

Neither on its own. The better strategy is the one whose wins and losses add up to more.

The lesson's last question compares two:

| | Strategy A | Strategy B |
|---|---|---|
| Wins | 8 in 10 | 4 in 10 |
| A win makes | $100 | $300 |
| A loss costs | $500 | $100 |
| Every 10 trades | −$200 | +$600 |

Strategy B wins half as often and makes $600 every 10 trades. Lesson 4 shows how a win rate and a [risk to reward ratio](/lessons/risk-management/risk-to-reward-ratio/) work together.

## Key points

- A strategy is worth every win and every loss added up, each at its own size.
- A strategy that wins 8 in 10 loses money when one loss costs five wins.
- Over 10 trades, about 1 trader in 6 is behind with a strategy that makes money.
- Judge a strategy over hundreds of trades.

Press Start above and add up your first 10 trades. [Lesson 2](/lessons/risk-management/losing-streaks/) shows how long the losing streaks of a winning strategy run.