Tradingglossary
Win rate
Win rate is the share of profitable trades out of all closed trades, in percent. 40 winners out of 100 trades is a 40% win rate.
On its own the win rate says nothing about whether you earn. A 30% win rate with a 1:4 risk-to-reward ratio is profitable trading; a 70% win rate with 3:1 the wrong way round is losing trading. Win rate only means something next to RR.
RR
RR (risk/reward) is how many times the profit on a trade exceeds the risk taken on it. Risk 1% of the account and take 2.5%, and the trade's RR is 2.5.
It is measured from the stop and the target, not from the outcome: RR 1:3 means the target sits three times further from entry than the stop. Average RR across the journal is the key measure of entry quality — it shows whether you take more out of the market than you pay in per attempt.
Profit factor
Profit factor is all profit divided by all loss. If winners brought 18% and losers took 9%, the profit factor is 2.0.
Below 1 means a losing system; 1.5 and up is considered workable. Unlike win rate, profit factor accounts for trade sizes, which makes it more honest. A single large trade can inflate it, so look at it over at least 50–100 trades.
Drawdown
Drawdown is how far the account fell from its peak to the following trough, in percent. If the account rose to +22% and then dropped to +9%, the drawdown was 13%.
It is measured along the equity curve in trade order, not as a sum of losses, which is why a spreadsheet formula cannot produce it. For prop firms it is the binding constraint: daily and overall drawdown limits are what most challenges are failed on.
Risk, R
R is the risk taken on a single trade, expressed as a percentage of the account. Results are conveniently counted in R: "took 2R" means a profit twice the size of the risk.
Counting in R removes account size from your statistics: a trade on $100 and a trade on $10,000 carry the same weight at the same risk. That is why period results in the journal are shown in percent rather than currency.
Breakeven
Breakeven (BE) is a trade closed at roughly zero, most often by moving the stop to the entry price. In statistics a BE counts as neither a win nor a loss.
For the same reason a breakeven neither breaks a winning streak nor extends it: there was a trade, but no risk left on it. A large share of BEs in a journal usually means the stop is being moved too early.
Bias
Bias is the expected direction for the day or session, decided before entry: up, down or none.
In the journal bias is its own field, and it exposes the most common leak there is: entries taken against your own daily bias. There are usually few of them, and they cost disproportionately much.
Killzone
A killzone is a short window inside a trading session that statistically carries most of the movement — for example, the first hour after the London or NY open.
The term comes from ICT methodology. The journal matches entry time against the session, so you can see which hours your entries work in and which they don't.
Setup
A setup is a repeating entry pattern defined by your trading rules: break of structure, liquidity sweep, return into an imbalance, and so on.
Setup is the single most useful field in a journal, because it gets its own statistics. A breakdown by setup answers which of your entries actually works and which one you take out of habit.
Expectancy
Expectancy is the average result of one trade, given your win rate and RR. The formula: win rate × average win − loss rate × average loss.
Positive expectancy means the system earns across a long run of trades, even when individual days are negative. It is the real answer to "does my trading work" — and it requires trade history, which means a journal.
Frequently asked
What win rate is considered normal?
There is no normal win rate apart from RR. At an average RR of 3, a 30% win rate is profitable; at RR 1 you need above 50% just to cover costs. Look at profit factor and expectancy instead.
Why is profit factor better than win rate?
Profit factor accounts for trade sizes: it divides all profit by all loss. Win rate counts only the number of trades, so it cannot tell a 0.2% trade from a 4% one.
How many trades before the statistics mean anything?
Per-setup breakdowns start to make sense from 20–30 trades per setup, and overall profit factor from 50–100 trades. Below that the numbers show variance rather than the quality of the system.
updated October 27, 2026