【summary】
Winning rate is the ratio of the number of wins divided by the total number of wins. It is often used not only in sports and horse racing, but also in investment and trading. However, a high winning rate does not necessarily mean that you will make a profit. When investing, it is important to consider "winning rate" and "profit/loss per investment" as a set.
Conclusion
What is winning rate?
Percentage of wins out of total attempts
represents.
The calculation formula is as follows.
勝率 = 勝った回数 ÷ 総回数 × 100For example, if you trade 10 times and make a profit 6 times,
The winning rate is 60%.
Basic example of winning rate
| Number of wins | Total number of wins | Winning rate |
|---|---|---|
| 5 times | 10 times | 50% |
| 6 times | 10 times | 60% |
| 8 times | 10 times | 80% |
| 9 times | 10 times | 90% |
If you just look at the numbers, the higher the win rate, the better it looks.
However, there is a big pitfall here.
Even with a 90% win rate, you can still lose
For example, consider the following case.
Case A
- Win 9 times
- Lose once
The profits and losses are as follows.
| Number of times | Profit and loss |
|---|---|
| 9 wins | +1,000 yen |
| 1 loss | -15,000 yen |
total
+9,000円
-15,000円
---------
-6,000円The winning rate is 90%, but the final result is negative.
Profit even with 40% win rate
Case B
| Number of times | Profit and loss |
|---|---|
| 4 wins | +10,000 yen |
| 6 losses | -2,000 yen |
total
+40,000円
-12,000円
---------
+28,000円The winning rate is only 40%.
But profits are positive.
What really matters in investing
Investors focus on
Win rate
How many times do you win?
Profit/Loss Ratio
How much can you win in one game?
Expected value
How much profit will remain in the long run?
is.
The idea of expected value is
勝率 × 平均利益
－
負ける確率 × 平均損失It can be expressed as
Just looking at your win rate doesn't tell you your true ability.
How professional investors think
Surprisingly,
Many professional traders do not aim for a 100% win rate.
because,
- Lose small
- Win big
Because that strategy is effective.
for example,
- Win rate 45% *Profit:Loss=3:1
If so, you can make a good profit.
Difference between winning percentage and gambling
At horse races and casinos,
There is a deduction rate (Terasen).
Therefore, the expected value of all participants is negative.
On the other hand, investment
- Corporate profit growth
- Economic growth
- Dividend
, which could increase the value of the overall market.
This is the big difference.
Common mistakes made by beginners
Follow only the winning rate
“I just want to guess.”
That way of thinking is dangerous.
Can't cut losses
There are cases where losses become large because you don't want to admit defeat.
Take profits immediately
If you keep accumulating small profits, one big loss can wipe them out.
Framework for investment beginners
勝率
↓
平均利益
↓
平均損失
↓
期待値
↓
長期成績Winning percentage is important, but it's important not to judge based solely on it.
summary
Winning rate is the ratio of wins to the total number of times.
There are three important points:
- Even if the winning rate is high, it does not necessarily mean that you will make a profit.
- You may be able to make a profit even if the winning rate is low
- When investing, it is important to look at the expected value
Beginners can understand the essence of investing by focusing on ``how much money you have left in the end'' rather than ``how many times you won.''