> ## Documentation Index
> Fetch the complete documentation index at: https://kalpi.ai/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Win Rate

> Understand how to interpret the frequency of profitable periods in your backtests and live strategies.

**Win Rate** (also known as the Hit Ratio) is a straightforward but critical metric that measures the probability of a strategy generating a positive return over a given series of periods or trades.

In the Kalpi Backtester, Win Rate is typically calculated on a monthly basis, answering the question: *"Out of all the months tested, how many finished in the green?"*

## The Mathematical Formula

The calculation for Win Rate is a simple percentage of positive outcomes relative to the total number of outcomes:

$\text{Win Rate} = \left( \frac{\text{Winning Periods}}{\text{Total Periods}} \right) \times 100$

## How to Interpret Win Rate

While a high Win Rate is psychologically comforting, it does not guarantee a profitable strategy on its own. It must always be evaluated alongside the **Risk/Reward Ratio** (the average size of your wins versus the average size of your losses).

<CardGroup cols={2}>
  <Card title="High Win Rate / Low Reward" icon="scale-unbalanced">
    A strategy might have an 80% win rate, but if the average loss is five times larger than the average win, the portfolio will still lose money over time.
  </Card>

  <Card title="Low Win Rate / High Reward" icon="chart-line-up">
    Trend-following strategies often have low win rates (e.g., 35-40%) but remain highly profitable because their winning trades are structurally massive compared to their tightly controlled losses.
  </Card>
</CardGroup>

<Note>
  **Where to find this in Kalpi:** You can view your strategy's precise Win Rate within the **Monthly Distribution** tab of the Portfolio Analysis terminal.
</Note>