Reading your results: profit, win rate, drawdown

What profit, win rate, drawdown and the Sharpe ratio tell you, and what they hide.

Illustration on a made-up price series, not market data. Hypothetical, for education only.

What it measures

Profit is the total return. Win rate is the share of trades that made money. Drawdown is the fall from a previous peak to a later low (shaded in the figure). The Sharpe ratio is return divided by volatility: higher means a smoother ride.

How to read it

A high win rate is not enough: many small wins and a few big losses can still lose money.
Maximum drawdown shows the worst loss you would have had to sit through.
Few trades means little evidence. Ten trades can be luck.

A common mistake

Looking only at profit. Two strategies with the same profit can have very different drawdowns.

Check yourself

1. What is drawdown? Total profit. The number of losing trades. The fall from a previous peak to a later low.

2. A strategy wins 90% of its trades. Can it still lose money? Yes, a few big losses can outweigh many small wins. No. Only in falling markets.

3. Ten trades with a good result are ... proof the rule works. little evidence: they can be luck. enough to trade real money.

Try it

Run two templates on the same asset and period and compare their profit and Sharpe ratio side by side.

Open the app

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Educational content. Not investment advice. Past or simulated results do not predict future results.