$BTC Easily Overlooked Fatal Pitfall: The Balance Between Profit-Loss Ratio and Win Rate

Many people trade with a decent win rate but still lose money; the issue lies in the misconceptions surrounding profit-loss ratio and win rate. Figure two illustrates how many consecutive losing trades you may encounter based on your win rate in 50 trades. The key is to control risk, ensuring that your account can withstand the worst possible consecutive losses and that drawdown remains within your expectations for better execution of the trading system.

1️⃣ Profit-Loss Ratio: Big Gains with Small Losses vs. Small Gains with Big Losses, How Big is the Difference?

① Big Gains with Small Losses (High Profit-Loss Ratio) = Core of Stable Profitability

Average profit is significantly greater than average loss, such as a profit-loss ratio of 2:1, 3:1, or even higher.