Definition
The average percentage profit generated on your winning trades.
Formulas
- Stocks: Avg % on Winners = (Sum of % Returns on Winning Trades) / (Number of Winning Trades)
- Forex: Avg % on Winners = (Sum of % Returns on Winning Trades) / (Number of Winning Trades)
Examples
Stocks Example
- Trade 1: Investment of $500, Profit of $120 => 24% return
- Trade 2: Investment of $2000, Profit of $500 => 25% return
- Trade 3: Investment of $800, Profit of $100 => 12.5% return
- Avg % on Winners: (24% + 25% + 12.5%) / 3 = 20.5%
Forex Example
- Account Balance: $10,000
- Trade 1: Profit of $400 => 4% return
- Trade 2: Profit of $800 => 8% return
- Trade 3: Profit of $250 => 2.5% return
- Avg % on Winners: (4% + 8% + 2.5%) / 3 = 4.83%
Key Points
- Winning Strategy Assessment: Helps evaluate how profitable your winning trades are on a percentage basis.
Considerations
- Investment vs. Account Balance: The percentage return calculation differs for traditional investments vs. forex trading:
- Traditional Investments: Percentage return is calculated based on the trade’s specific investment.
- Forex: Percentage return is often calculated based on the overall account balance before the trade took place.
