Win rate is the most misleading number in scalping

[Shadow Trader]

A strategy that wins eighty percent of the time sounds impressive. It might also be losing money.

Win rate says nothing about the size of wins relative to losses. A system that makes one pip on each winner and loses five on each loser needs a win rate of more than eighty-three percent just to break even, before costs. Add a spread of half a pip and the threshold climbs.

Scalpers are particularly vulnerable to this illusion, because small targets and wide stops produce high win rates by design. The occasional large loss wipes out dozens of small wins, and the account curve looks like a staircase going up with sudden drops.

The numbers that matter are expectancy, meaning the average profit per trade after costs, and the distribution of results, including the worst losing streaks and the largest single losses.

A quick calculation: multiply win rate by average win, subtract loss rate times average loss, and subtract costs. If the result is barely above zero, the high win rate is a mirage.

Charting the cumulative profit by trade, rather than just the win rate, makes the effect visible. A strategy with a high win rate but a few large losses shows a staircase pattern, while one with a lower win rate and larger winners shows a smoother, rising curve. The shape reveals the character of the strategy more clearly than any single number.

What is the expectancy per trade for your strategy after costs, and how much does it depend on a few large wins or losses?