More than you think. A strategy with a 55% win rate, $40 average win and loss and $1.70 in costs per trade has a real edge of $2.30 per trade, but you need about 1,160 trades before you can tell it apart from chance. With 100 trades, a good strategy and a bad one look the same.
Enter your numbers: it tells you your edge after costs, how many trades you need to be sure it's real and what your trades so far actually prove.
Edge per trade (after costs)
Trades needed
Your true average result, with 95% confidence, is between
Typical cases
| Win rate | Avg. win | Avg. loss | Edge per trade | Trades needed |
|---|---|---|---|---|
| 55% | $40.00 | $40.00 | $2.30 | 1,160 |
| 40% | $80.00 | $40.00 | $6.30 | 340 |
| 70% | $20.00 | $40.00 | $0.30 | 32,270 |
| 50% | $60.00 | $40.00 | $8.30 | 140 |
| 35% | $120.00 | $40.00 | $14.30 | 110 |
All with $1.70 in costs per trade (commission and 1 tick of slippage on a Micro Nasdaq).
Why it takes so many
- The edge is small compared with the noise. Each trade swings ±$40 while the edge is a few dollars. To see a small signal through a lot of noise you need many repetitions: halving the edge needs four times as many trades.
- Costs eat the edge first. Every dollar of commission and slippage reduces the edge and pushes the number of trades up sharply.
- This is the minimum. It assumes independent trades. In real markets, losses cluster on bad days, so in practice you need somewhat more.
What to do with this number
- Before buying an evaluation: if your backtest or your demo has fewer trades than this, your edge is still a hypothesis. Test it longer in a simulator, which is free.
- Don't change the strategy every 20 trades. With so few, the results are noise. Decide in advance how many trades you'll take before judging it.
- Beware of optimizing: trying many variants and keeping the best one makes it look better than it is (see how many tests did you run?).
Next step: the journal in the futures simulator shows this same margin of error for your trades, and the losing streak calculator tells you which streak is normal with your win rate.
Educational content based on our own experience. Not investment advice. Firm rules change: check them on each firm's website. This article contains no affiliate links.