Understanding Win Rate, Profit Factor, and Sharpe Ratio
Performance Metrics Explained
The ReadiTrades leaderboard displays several key metrics for each signal provider. Here's what they mean and why they matter.
Win Rate
The percentage of trades that are profitable. A 70% win rate means 7 out of 10 trades make money.
Good: 55-75% | Excellent: 75%+
⚠️ Win rate alone isn't enough - a 90% win rate with huge losing trades can still lose money overall.
Profit Factor
Total profits divided by total losses. A profit factor of 2.0 means for every $1 lost, $2 was gained.
Minimum: 1.5 | Good: 2.0+ | Excellent: 3.0+
Sharpe Ratio
Measures risk-adjusted returns. Higher Sharpe means better returns relative to the risk taken. It accounts for the consistency of returns, not just total profit.
Acceptable: 1.0+ | Good: 2.0+ | Excellent: 3.0+
How to Use These Metrics Together
The ideal signal provider has a win rate above 60%, profit factor above 1.5, and Sharpe ratio above 1.0. Combined with low drawdown, these metrics paint a complete picture of trading quality.
Use our leader selection guide for a practical framework to evaluate these numbers.
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