Sample Size
Definition
The number of trades your results are based on. The smaller the sample, the more your win rate and average result reflect luck rather than the strategy's real edge.
Example
“With only 30 trades in his journal, the sample size was too small to say whether the setup worked.”
Detailed Explanation
In trading, sample size decides how much you can trust a set of results. Twenty trades can make a weak strategy look brilliant or a good one look broken, because short runs of luck dominate small samples. The smaller the edge, the more trades it takes to tell it apart from chance: a strategy earning 0.1R per trade can need well over a thousand trades to prove itself statistically, while a 0.3R edge shows up much sooner. Most traders use 50 trades as a first check and 100 to 200 as a fairer test. Splitting your trades across many strategies shrinks the sample for each one, which is one reason specializing early helps.
Related Terms