Can a Strategy with a 70% Win Rate Still Lose Money?

Summary

Yes. A strategy can win seven trades out of ten and still lose money when the losses outweigh the gains. Win rate counts outcomes; it does not measure their size, the capital committed, or trading costs.

For anyone evaluating an Indonesian stock Screener or backtest, the first question should be what the report calls a “win.” Reaching a price threshold during an observation window is not the same as closing a profitable trade.

Key Takeaways

• Read win rate together with average gain, average loss, costs, and position size.
• Keep target-touch rates separate from simulated exits and executed trades.
• Do not turn an average signal return into a portfolio return.
• A mathematical break-even threshold is conditional on its inputs, not a forecast.

A 70% Win Rate That Loses Rp100,000

Consider ten imaginary, completed trades. Each uses exactly Rp1 million of entry capital. Seven gain 2%; three lose 5%. There is no leverage, no reinvestment, and costs are initially excluded.

Now assume an illustrative all-in round-trip cost of 0.9% of entry capital on every trade: Rp9,000 per trade, or Rp90,000 across ten trades. This is a made-up assumption, not an Indonesian broker’s quoted fee or a universal estimate of slippage.

The net result becomes −Rp100,000, or an arithmetic average of −1.0% per trade on equal entry notionals. That is not a return on a specified portfolio: we have not defined the initial account capital, trade overlap, or holding periods.

All numbers in this example were constructed by Trade Inc Research for education. They are not Trade Inc signal performance, a historical sample, or live trading results.

Calculate the Break-Even Rate

Under the same simplified model:

Average net return = p × W − (1 − p) × L − C

Here, p is the proportion of winning trades, W is the average positive gross return, L is the positive magnitude of the average gross loss, and C is the average cost measured against entry capital. Use consistent units and mutually exclusive win/loss categories.

With W = 2%, L = 5%, and C = 0.9%, a 70% win rate gives:

0.70 × 2% − 0.30 × 5% − 0.9% = −1.0%.

Setting the expression to zero gives the break-even rate:

p = (L + C) / (W + L) = 5.9 / 7 ≈ 84.29%.

Before costs, it is approximately 71.43%. Neither figure is a target the strategy is expected to achieve. They are thresholds under the stated payoffs and cost assumption; change those inputs and the thresholds change.

If there are flat trades, include them explicitly rather than forcing them into one of two categories. If average gains and losses are already net of costs, do not subtract costs again.

A Target Touch Is Not a Profitable Exit

Imagine a signal recorded at Rp1,000. During its evaluation window, the price reaches Rp1,030 and later closes at Rp950. A “touched +2%” statistic can count success while the entry-to-final-close observation is negative.

Neither observation establishes an executable trade. A strategy must specify when its signal became available, the entry convention, order rules, and exit handling. In particular, a signal that depends on the completed daily bar cannot simply be assumed known at that day’s opening.

If both a target and a stop lie inside one daily bar’s high-low range, those daily values alone do not identify which happened first. The report should use suitable finer-grained data or disclose a consistent ambiguity rule. It should not silently choose the favorable sequence.

Why the Same Win Rate Can Produce Different Account Results

Our example uses equal cash allocations. In an actual portfolio, a large losing position can outweigh several smaller winners. Overlapping signals also compete for cash, and repeat signals in one ticker may represent overlapping exposure rather than independent opportunities.

A portfolio simulation therefore needs a capital budget, sizing rules, cash treatment, concurrent-position limits, and a timestamped equity series. Drawdown—the decline from an account-value peak to a subsequent trough—cannot be reconstructed from win rate alone.

The counterpoint matters: a lower win rate is not automatically better. A strategy with occasional large gains can also be fragile if its apparent success depends on a few observations. Both hit frequency and payoff distribution need scrutiny.

What to Request Before Trusting the Headline

Ask for one consistent report containing:

1. The definition of a win and the number of eligible, completed, flat, and pending observations.
2. Average gains and losses on the same return basis, plus the median and largest losses.
3. Fees and execution assumptions, with results under less favorable costs.
4. Position sizing and treatment of repeated or simultaneous signals.
5. Results beyond the period used to select the rules, without retuning after seeing the outcome.

The SEC investor-education bulletin on performance claims cautions that backtests are hypothetical and that costs, methodology, and selective presentation affect interpretation. It is cited for investor education, not as a statement of Indonesian legal requirements.

Conclusion

A high win rate is a description, not a verdict. First establish what was counted, then reconcile the payoffs and costs, and only then assess a capital-constrained portfolio.

This explainer, published by Trade Inc Research on 25 September 2026, provides a calculation framework—not a new backtest or investment recommendation. For a separate empirical example with its own scope and limitations, see our volume-breakout Screener comparison.

This article is for research and information only. It is not personalized financial advice or an instruction to trade.