Average Winner Versus Average Loser

The relationship between average winners and losers explains why two traders with the same win rate can have very different results.

What to measure

Calculate gross wins divided by winning trades and gross losses divided by losing trades, then express their absolute ratio as payoff ratio.

Review the ratio with win rate and expectancy. Investigate whether a few very large trades are distorting either average.

Do not optimize one side in isolation. Cutting every winner can improve win rate while damaging expectancy.

Use these measurements as an educational review of recorded executions, not as a prediction or trading recommendation.