Are you feeling frustrated lately? You open your account and see a win rate of almost 70%, but when you settle up at the end of the month, you are still losing money.
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Do not rush to question your life choices. You are not alone. Many people get stuck at this exact point. Win rate is sometimes the biggest illusion in trading. Today we are not talking about how to improve win rate. Instead, I will show you how to review your journal and check three core numbers. Once you check these three items, you will basically see clearly where your losses are coming from.
Check 1: Risk-Reward Ratio
[What to do]: Calculate how many average losses your average win can absorb.
[How to do it]: Open your trade record spreadsheet and calculate two numbers.
Average profit = Total profit from all winning trades ÷ Number of winning trades
Average loss = Total loss from all losing trades ÷ Number of losing trades
Risk-reward ratio = Average profit ÷ Average loss
[Completion standard]: Calculate this ratio. If the number is below 1.5, sound the alarm.
High win rate + low risk-reward ratio = slow bleeding. I have seen people win 9 out of 10 trades, earning 50 U per trade. But the one losing trade lost 600 U. The win rate was 90%, yet they still ended up down 150 U.
Go to your journal and look at the "take profit price" and "stop loss price" columns. If your trades all show taking small profits quickly and holding losing trades too long, this number will definitely look bad. Remember this: Profit result = (win rate × risk-reward ratio) - (1 - win rate). The risk-reward ratio is the lever that raises your final expected value.
Check 2: Profit Factor
[What to do]: Look at the big picture. Divide total profit by total loss to see whether your system actually has positive expectancy.
[How to do it]: Calculate two totals.
Total profit = The sum of profits from all winning trades
Total loss = The sum of losses from all losing trades, counting only lost principal and excluding fees
Profit factor = Total profit ÷ Total loss
[Completion standard]:
Above 1.5: A decent system. You can keep refining it.
Between 1.0 and 1.5: Barely surviving. You are earning hard money, and fees are likely eating up your profit.
Below 1.0: Stop trading immediately. It means your system is losing money overall, no matter how high your win rate is.
This number is like a health check report for your trading account. It filters out the illusion of "winning small and losing big" and directly tells you whether the strategy has long-term value.
Check 3: Average Holding Time and Execution Deviation
[What to do]: Check your ability to hold trades and your execution discipline. See whether you take profit too early and hold losers too long.
[How to do it]: Add two comparison columns in your journal:
Actual holding time: Record closing time minus opening time.
Plan deviation: Compare against the planned take profit price and stop loss price you wrote down when opening the trade.
[Completion standard]: Focus on the comparison between "holding time of big losing trades vs holding time of big winning trades".
If the average holding time of losing trades is much longer than that of winning trades, meaning you hold losers too long, then you are a classic case of "cutting profits short and letting losses run."
If you often close trades before the planned take profit price is reached, it means your execution discipline has a problem, or you are trading on emotion.
This deviation is the data that most exposes mindset problems in a journal.
FAQ
Q: My journal does not record position size. Does that affect these three checks? A: It has a huge impact. When calculating risk-reward ratio and profit factor, you must base profit and loss on the position value in U terms for each trade. If you only record percentages and not amounts, all three of these data points are useless.
Q: Should trading fees and funding rates be included in these metrics? A: Yes. Especially in futures trading, frequent order fees and funding fees are invisible killers that eat into your profit factor. When calculating total loss, it is recommended to list "fees + funding fees" as a separate deduction line.
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Next Step
Go review your journal from the past 30 days right now. Calculate these three numbers: risk-reward ratio, profit factor, and average holding time. If your profit factor is below 1.2, do not open any new trades for the next week. Force yourself to only take planned trades with a risk-reward ratio better than 2:1, and watch what happens to your account balance.
