LUCK OR EDGE? · FREE CHEAT SHEET
The Luck-or-Edge Cheat Sheet
Five checks to tell whether your trading results are skill or luck.
1 Count your trades first.
At a 1:1 risk-to-reward, this is how often pure luck alone shows a win rate of 60% or better:
Trades | Chance luck alone hits 60% or more |
|---|---|
10 | 38% |
50 | 10% |
100 | 2.8% |
200 | 0.3% |
Below 100 trades, a good record is weak evidence.
2 Find your noise band.
Divide 1 by the square root of your number of trades: ±14% at 50 trades, ±10% at 100, ±7% at 200. At 1:1, any win rate within that band of 50% is normal luck.
3 Know your break-even win rate.
Before costs, it's 1 ÷ (1 + reward-to-risk): 50% at 1:1, 33% at 2:1, 25% at 3:1. Costs push it higher. Judge your win rate against this line, not against 50%.
4 Check the average result per trade.
Win rate × average win, minus loss rate × average loss. A 60% win rate with losses twice the size of the wins still loses 0.2R a trade.
5 Test on trades your rules have never seen.
Hold back a recent period and run your rules on it once. Then compare with random entries that use the same stop and target. If random entries often match you, your setup isn't what's making the money.
EVERY TUESDAY
Every Tuesday, LuckOrEdge runs one popular strategy through these checks, with real data and costs.