Winning and Losing Trades
A winning trade closes with a profit and a losing trade with a loss; whether a small result counts as a win depends on whether costs are included, so define it consistently.
Every closed Position ends as a winner, a loser or roughly flat. That sounds simple, but a trade that gains a little before Trading Fees and Commissions can be a loser after them. Deciding once how you count wins and losses — and sticking to it — makes your Win Rate, Expectancy and Trading Journal honest.
- Category
- Trading Basics
- Reading time
- 4 min
- Also called
- Winners and losers, Winning trade, Losing trade
- Updated
Winning and losing trades in plain words
The disposition effect is the habit of holding losers too long and selling winners too soon.1 How you treat winners and losers matters as much as how many you have.
A win tends to boost confidence and a loss tends to bring doubt.2 Neither feeling says whether the trade followed your plan.
A clear definition helps: count a trade as a win only if it gains after costs, and record every result the same way in your Trading Journal.
How to classify your trades
Pick one definition
Decide whether results are measured before or after Trading Fees and Commissions and Slippage; after costs is usually more honest.
Set a flat zone
Treat tiny results near Break-Even as scratches so they do not inflate your Win Rate.
Record the result
Log each outcome next to the plan, so the journal records decisions as well as results.2
Measure in R
Express each result as an R-Multiple of the planned risk so wins and losses are comparable.
Check behaviour
Look for the disposition effect — selling winners too soon and holding losers too long.3
Review the mix
Combine win rate with Average Win and Average Loss to see your Expectancy; IG suggests a clear Risk-to-Reward Ratio for each trade.4
Worked examples
Example 1 — Clear winner
Win (+1.8R)A hypothetical trader risks 100 and closes the trade 180 ahead after costs.
| Planned risk | 100 |
| Result after costs | +180 |
The result is positive after costs, so it is logged as a win; a journal entry keeps the record of the decision as well as the outcome.2
Example 2 — Winner that is really a loser
Loss (−0.03R)A hypothetical scalp gains 6 before fees, but fees and slippage cost 9.
| Gain before costs | +6 |
| Result after costs | −3 |
Counted after costs it is a small loss, which is exactly the kind of trade that inflates a win rate if fees are ignored; a losing trade may trigger doubt, so record it calmly.2
Example 3 — Scratch trade
ScratchA hypothetical trade closes 2 ahead on a risk of 100 after costs.
| Planned risk | 100 |
| Result after costs | +2 |
With a flat zone of ±5, it is logged as a scratch; the journal keeps a record of decisions, not just outcomes, so the label stays consistent.2
Winning vs losing trade
| Aspect | Winning trade | Losing trade |
|---|---|---|
| Result after costs | Positive | Negative |
| Typical feeling | More confidence | Doubt |
| Common mistake | Closing too soon | Holding too long |
| What to log | Plan, entry, exit, R | Plan, entry, exit, R |
Where the definition matters
Win rate
Your Win Rate is only as good as the definition behind it.
Expectancy
Expectancy mixes how often you win with how much.
Profit factor
Profit Factor compares total gains with total losses.
Journal reviews
A Trading Journal needs consistent labels to show patterns.
Advantages and disadvantages
Advantages
- Makes your statistics honest.
- Lets you compare strategies fairly.
- Reveals hidden cost problems.
- Reduces emotional labelling of trades.
Disadvantages
- Small cost errors can flip results.
- Win counts alone ignore size.
- Scratch rules add judgement.
- Different platforms report results differently.
Going deeper
Read as far as you need. Each level builds on the one before it.
Count after costs
Beginner
A trade that gains before costs but loses after them is a loss in your account, so measure after Trading Fees and Commissions. A journal should capture the decision as well as the result.2
Disposition effect
Intermediate
The SEC-published research review says the disposition effect is the tendency to sell winning positions and hold onto losing positions, and that it is widely operative and counterproductive.3
Common mistakes
Ignoring costs
Fees can turn small wins into losses.
Moving the goalposts
Changing the definition to look better.
Judging by count alone
Ten small wins can lose to one big loss.
Cutting winners early
The disposition effect shrinks average wins.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Define wins and losses once.
- Count after costs.
- Use a flat zone for scratches.
- Measure results in R.
- Watch for the disposition effect.
Frequently asked questions
Is a break-even trade a win?
Should fees be included?
Is a high win rate enough?
Further learning
- Win Rate
How often you win.
- Expectancy
Average result per trade.
- R-Multiple
Results in units of risk.
- Trading Journal
Recording every trade.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- SEC (Investor.gov). Investor Bulletin: Behavioral Patterns of U.S. Investors (opens in a new tab) Checked .
- CMC Markets. Trading Journals: The Missing Link in the Trading Process (opens in a new tab) Checked .
- SEC (Library of Congress report). Behavioral Patterns and Pitfalls of U.S. Investors (opens in a new tab) Checked .
- IG. Six financial trading biases that may cloud your judgement (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Win Rate (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.