Win Rate vs. Payout Probability
How does a high win-rate strategy compare to a high-RR one, when both have the same theoretical edge? This tool runs thousands of Monte Carlo simulations to show how win rate affects your chances of survival in a trailing drawdown environment.
Simulator Controls
Strategic Insight: The data shows a "U-shaped" effort curve. Extreme reward (Low WR) requires many costly retries, while extreme safety (High WR) becomes a slow grind. The 35-55% win rate range is the "Sweet Spot" for most firms.
Efficiency: Average Cost Per Payout
Expected capital burn to achieve 1 successful payout cycle
The Smoothness Effect
Why do two strategies with the same Profit Factor result in wildly different payout probabilities? It comes down to the variance of returns.
A higher win-rate strategy (even with lower RR) produces a smoother equity curve with smaller peak-to-trough drawdowns. In a world of trailing drawdowns, smoothness is king. If your drawdown limit trails your highs, a high-RR/low-win-rate strategy is far more likely to get caught in a normal losing streak that drags the account into the trailing stop before the next win arrives.
Simulation Methodology
This tool runs 1,000 iterations for every 5% increment of win rate from 10% to 90%. For each win rate, the Reward-to-Risk ratio is mathematically adjusted to maintain the Profit Factor you selected via the slider. For example, if you select a 1.5 PF:
- At 20% Win Rate, R:R must be 1:6.0
- At 50% Win Rate, R:R must be 1:1.5
- At 80% Win Rate, R:R must be 1:0.375
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