Profit and Loss Ratio > Win Rate: Many people have got it wrong

Many people like to ask: "Teacher, what is the win rate of your strategy?"

I am more concerned about: the profit and loss ratio.

There is a simple formula that I suggest you remember:

Expected Return = Win Rate × Average Profit - Loss Rate × Average Loss

Let me give a very simple example (just for illustration, not advice):

The win rate is only 40%, but:

Each loss -1R

Each profit +3R

Expected = 0.4×3 - 0.6×1 = 1.2 - 0.6 = +0.6R (still making money in the long run)

Conversely:

Win rate 70%, but

Take profit +1R, stop loss -2R

Expected = 0.7×1 - 0.3×2 = 0.7 - 0.6 = +0.1R (slight execution issues turn negative)

So when I design a strategy, I will prioritize these few things:

Can I achieve "small losses, large profits" instead of the opposite?

Is the stop loss fixed and executable, rather than "going by feeling"?

When a big market movement comes, can I let profitable positions run as far as possible?

📌 Do not be fooled by gimmicks like "90% win rate" anymore.

In the highly volatile market of cryptocurrency, a healthy profit and loss ratio + stable execution is much more important than an inflated win rate.