Only 3 numbers matter:
Your biggest winning day's profit
Your total profit (all closed trades)
The 40% rule
⚖️ The Formula
CR (%) = (Biggest Win Day ÷ Total Profit) × 100
Must be ≤40%
🧮 Step-by-Step Calculation
Example Trader: Alex ($10K Account)
Day | Profit | What Happened |
1 | +$500 | Small win |
2 | +$4,000 | Big trend catch! |
3 | +$300 | Small win |
4 | -$200 | Loss (doesn't count as "win") |
5 | +$600 | Medium win |
Step 1: Find Biggest Winning Day
→ Day 2: $4,000
Step 2: Calculate Total Profit
= $500 + $4,000 + $300 + $600 = $5,400
(Losses reduce balance but aren't "profit")
Step 3: Apply Formula
CR = ($4,000 ÷ $5,400) × 100 = 74%
74% > 40% → ❌ Continue Trading!
🛠️ How to Fix It (2 Options)
Option 1: Trade More to "Dilute"
Day | New Profit | New Total Profit | New CR |
6 | +$800 | $5,400 + $800 = $6,200 | $4,000 ÷ $6,200 = 64% |
7 | +$1,000 | $7,200 | $4,000 ÷ $7,200 = 56% |
8 | +$1,800 | $9,000 | $4,000 ÷ $9,000 = 44% |
9 | +$1,000 | $10,000 | $4,000 ÷ $10,000 = 40% ✅ |
Option 2: Partial Close (Avoid Big Wins)
On Day 2: Close 50% at $2,000 profit
Close 50% next day at +$2,200
→ Biggest win = $2,200 (not $4,000)
→ CR = ($2,200 ÷ $5,400) = 41% (almost compliant!)
📝 Key Rules to Remember
Rule | Example |
Only profitable days count for "Biggest Win" | Day 2 = $4,000 (win) ✓ |
Losses reduce total profit → May worsen CR | $5,000 profit + $2,000 loss = $3,000 total → CR increases! |
Open trades don't count | Floating $1,000 profit? Doesn't help CR |
You control the ratio with more trades or partial closes | See Options 1 & 2 above |
💡Tip: After a big win, trade smaller positions until your CR drops below 40%!
🧩 Why CR?
To ensure profits come from consistent skill – not one lucky trade.
✅ Good: Many balanced wins
❌ Bad: "All-in" gambles