A strategy that wins often sounds attractive, but frequent small wins can hide a few large losses that wipe out profits. In Indian markets—NSE, BSE, MCX—traders can easily be fooled by a high win-rate number while real account equity drifts downward. Let's look at why that happens and what to check.
Most traders focus on win rate because it's easy to understand: "I win 9 out of 10 trades." But the single most important concept to add is expectancy — the average money you make per trade after costs. Expectancy depends on both win rate and the average win vs average loss.
Consider a simple example. Suppose you take 10 trades:
- 9 winners each making ₹500 = ₹4,500
- 1 loser losing ₹5,000 = -₹5,000
Net result = -₹500
You had a high success ratio, but negative expectancy. This is a very common trap, especially in intraday scalping or options selling where winners are small and losses are a few big moves.
Common reasons a 90%-style approach fails
Costs that matter in India
- Brokerage: Even zero brokerage apps often have hidden fees in exchange charges or order routing. For active traders, consider per-trade costs.
- STT & other taxes: Equity intraday, delivery and options have different tax treatments. For example, STT on futures/options and GST on brokerage affect net returns.
- Slippage and impact: In fast markets, you may not get the ideal entry/exit price. A small slippage per trade adds up.
How to evaluate a strategy correctly
- Calculate expectancy: Expectancy = (Win rate × Average win) − (Loss rate × Average loss). This tells you money per trade, not just frequency.
- Track maximum drawdown and recovery time: A 90% win strategy that causes a 40% drawdown is risky if it takes months to recover.
- Use risk-adjusted metrics: Sharpe ratio, Sortino, and Sharpe-like measures help compare strategies with different win rates and volatilities.
- Stress-test across market regimes: Check performance in trending, volatile, and range-bound periods. India’s markets can behave very differently during FII inflows, RBI announcements, or budget days.
Practical changes to make the strategy profitable
A quick checklist before trading live
Final thought
A high percentage of winning trades is pleasing, but it is not proof of profitability. Focus on money per trade, drawdowns, and cost-adjusted returns. In Indian markets, being aware of taxes, brokerage structure, and market-specific behavior will keep your strategy honest and scalable. Make small changes—better risk-reward, sensible sizing, and proper testing—and your “frequent wins” can turn into consistent profits.
Most traders focus on win rate because it's easy to understand: "I win 9 out of 10 trades." But the single most important concept to add is expectancy — the average money you make per trade after costs. Expectancy depends on both win rate and the average win vs average loss.
Consider a simple example. Suppose you take 10 trades:
- 9 winners each making ₹500 = ₹4,500
- 1 loser losing ₹5,000 = -₹5,000
Net result = -₹500
You had a high success ratio, but negative expectancy. This is a very common trap, especially in intraday scalping or options selling where winners are small and losses are a few big moves.
Common reasons a 90%-style approach fails
- Poor risk-reward — If average winners are tiny and one loss is large, the math goes against you.
- Position sizing mistakes — Using the same size for all trades ignores that losing trades can be much bigger in magnitude.
- Ignoring transaction costs — In India, brokerage, STT, GST on brokerage, stamp duty and slippage add up. For frequent small trades these costs can kill profits.
- Survivorship bias and small sample — A short backtest or cherry-picked period can make win rates look excellent but fail in live markets.
- Overfitting — Strategy tuned to historical quirks that don’t repeat in future sessions.
Costs that matter in India
- Brokerage: Even zero brokerage apps often have hidden fees in exchange charges or order routing. For active traders, consider per-trade costs.
- STT & other taxes: Equity intraday, delivery and options have different tax treatments. For example, STT on futures/options and GST on brokerage affect net returns.
- Slippage and impact: In fast markets, you may not get the ideal entry/exit price. A small slippage per trade adds up.
How to evaluate a strategy correctly
- Calculate expectancy: Expectancy = (Win rate × Average win) − (Loss rate × Average loss). This tells you money per trade, not just frequency.
- Track maximum drawdown and recovery time: A 90% win strategy that causes a 40% drawdown is risky if it takes months to recover.
- Use risk-adjusted metrics: Sharpe ratio, Sortino, and Sharpe-like measures help compare strategies with different win rates and volatilities.
- Stress-test across market regimes: Check performance in trending, volatile, and range-bound periods. India’s markets can behave very differently during FII inflows, RBI announcements, or budget days.
Practical changes to make the strategy profitable
- Improve risk-reward — Aim for average winners larger than average losses. Even a 60% win rate can be profitable with a 1.5:1 reward:risk.
- Adjust position sizing — Use fixed fractional sizing so a single loss can’t blow out the account. For example, risk 1–2% of capital per trade.
- Account for costs — Factor in brokerage, STT, GST, and estimated slippage into your backtests.
- Limit concentration — Avoid large exposure in correlated trades; diversify across segments or timeframes.
A quick checklist before trading live
Final thought
A high percentage of winning trades is pleasing, but it is not proof of profitability. Focus on money per trade, drawdowns, and cost-adjusted returns. In Indian markets, being aware of taxes, brokerage structure, and market-specific behavior will keep your strategy honest and scalable. Make small changes—better risk-reward, sensible sizing, and proper testing—and your “frequent wins” can turn into consistent profits.