Win rate is a distraction at small targets

[Amanhasnoname]

A 70 percent win rate sounds excellent. At a 1.5 pip target with a 4 pip stop, it is a money loser.

The relevant number is expectancy: average win times win rate, minus average loss times loss rate, minus costs. Scalpers with tight targets often have high win rates and thin or negative expectancy.

Here is a concrete case. Win 70 percent at +1.5 pips gives +1.05 per trade. Lose 30 percent at -4 pips gives -1.2. Net -0.15 per trade, before costs. Add a 0.8 pip cost and the loss is almost a full pip per trade.

The opposite also exists. A 35 percent win rate with a 5 pip target and a 2 pip stop gives +1.75 and -1.3, net +0.45, before costs. Not wonderful, but at least positive.

Both styles can work. The point is judging a system by expectancy and cost-adjusted results, not by how often it wins.

What expectancy does your system actually produce after all costs?