Win rate feels like the thing that matters, but it can lie to you. A trader who wins 8 out of 10 trades can still go broke, and a trader who wins only 4 out of 10 can get rich. What actually decides the outcome is expectancy: the average amount you make or lose per trade once wins and losses are blended together.
The formula is simpler than it sounds. Expectancy equals your win rate times your average win, minus your loss rate times your average loss. To keep it clean, measure your wins and losses in R, where one R is the amount you risked on the trade. So if you risk 10 dollars and make 30, that win is 3R.
Here is it in action. Say you win 40% of the time and your average win is 3R, while you lose 60% of the time and your average loss is 1R. Expectancy is 0.40 times 3, which is 1.2, minus 0.60 times 1, which is 0.6. That leaves plus 0.6R per trade. You are wrong most of the time and still make money, because your winners are much bigger than your losers.
Now watch a high win rate fail. Say you win 60% of the time but your average win is only 1R and your average loss is 2R. Expectancy is 0.60 times 1, which is 0.6, minus 0.40 times 2, which is 0.8. That is minus 0.2R per trade. You win most of your trades and still bleed money, because your few losers are twice the size of your many winners.
A real edge is positive expectancy: win rate times average win, minus loss rate times average loss, coming out above zero. Win rate alone tells you nothing until you know the size of your wins and losses.
Tip. Track your trades in R, not dollars. Once you know your real win rate and your average win and loss, you can compute expectancy and finally see whether you have an edge or just a story.