Your win rate is not fixed — it is a direct result of how much of a move you try to capture. Set the target at 25% of a retracement, and nine out of ten trades hit. Push it to 100%, and only one in ten does.

This is the lesson behind the 90% win rate formula. One number. One rule. Applied consistently on the 1-minute Nasdaq chart.

The Setup: Two Tools Only

The entire system runs on two indicators:

1-minute candlestick chart — each candle forms in one minute. Close above open: bullish. Close below open: bearish. No interpretation needed.

20-period moving average (20 MA) — the only MA that consistently extracts money from this market. After testing the 8, 33, and 52, the 20 MA produces the cleanest signals. Everything else gets removed from the chart.

:::callout[type=info] The 20 MA is a trend reader. Sloping up = uptrend. Sloping down = downtrend. Price stretching far away from it = pullback coming. :::

Why Price Always Pulls Back

When price moves far from the 20 MA in either direction, it is stretched. The market treats this like a rubber band under tension — it snaps back toward the average. That return move is the pullback, and scalping lives inside it.

A large gap between price and the 20 MA signals a higher probability of a short retracement. The trade is: enter the retracement, take a small profit, exit fast.

// Price deviation signal
IF price_distance_from_20MA > threshold:
    WATCH for pullback entry
ELSE:
    WAIT — deviation not large enough to trade

The Win Rate Backtested by Retracement Level

Through backtesting Nasdaq charts, the relationship between target level and win rate is clear:

Target Win Rate
100% retracement 10% (1 in 10)
75% retracement 20% (2 in 10)
50% retracement 60% (6 in 10)
25% retracement 90% (9 in 10)

:::callout[type=tip] In scalping, win rate is everything. Swing trading can rely on risk-to-reward ratios. Scalping cannot. You need to win the majority of trades to compound gains. :::

The 25% retracement level is the minimum profit zone. Not a target to maximize — a floor to secure.

// Retracement target rule
IF target == 25_percent_of_move:
    WIN_RATE ≈ 90%
    COMPOUND small wins repeatedly
ELIF target >= 75_percent_of_move:
    WIN_RATE drops to 20-30%
    REQUIRES 5:1 risk-reward to stay profitable
    OUTCOME: most traders blow up here

Why Chasing 100% Destroys Accounts

Targeting 75% or 100% of a retracement requires a 5:1 risk-to-reward ratio to remain profitable at a 20% win rate. That ratio does not happen through skill — it happens when the market cooperates. The market cooperates about 30% of the time. The other 70% is ranging or declining.

Traders chasing full retracements hold positions overnight hoping for continuation. A trade that was briefly profitable turns into a loss. This is greed disguised as patience.

:::callout[type=warning] Taking 25% feels small. But stacking nine wins out of ten compounds faster than waiting for one big winner that arrives once in ten attempts. :::

The Two-Stage Profit Approach

Securing 25% first and then holding for 50% is a rational extension. Since 50% retracements occur six out of ten times, this approach adds upside without sacrificing the base win rate.

// Two-stage profit capture
ENTER trade at pullback entry
SET take_profit_1 = 25_percent_of_move

IF price reaches take_profit_1:
    CLOSE half position — lock profit
    HOLD remainder, target 50_percent_of_move

IF price stalls below 50_percent:
    CLOSE remainder — trend likely continuing

Reading the Chart: What the Bounce Size Tells You

The size of the bounce is a signal in itself, not noise.

Bounce stays below 50%: Nine out of ten times, a new low (or high, in an uptrend) follows. The dominant trend is continuing. Take 25% and exit. Re-enter on the next deviation.

Bounce breaks above 75%: The trend may be reversing. This is no longer a scalp trade. Set a stop at the recent structural low, and target 1R, 2R, or 3R trades from there.

// Bounce size interpretation
IF bounce < 50_percent_of_prior_move:
    PROBABILITY of new extreme = HIGH
    ACTION: take 25% profit, exit, wait for next deviation

IF bounce > 75_percent_of_prior_move AND no_new_extreme_follows:
    SIGNAL: possible trend reversal
    ACTION: switch to swing setup — set stop at structural low, target 1R-3R

Real Example: Downtrending Nasdaq on 1-Minute

  1. 20 MA slopes downward. Price stretches far below it — large deviation.
  2. A pullback appears. Measure the prior drop. Take profit at 25% of that drop. Exit.
  3. Price drops again. New deviation. New pullback. Take 25%. Exit.
  4. Repeat throughout the day.

Every bounce in that sequence stayed below 50%. New lows followed each time. The 25% exit was the correct decision on every trade.

Then one bounce pushed past 75% and price failed to make a new low. That was the structural shift — the signal to switch from scalp mode to a trend-reversal setup.

:::callout[type=info] Knowing the difference between a scalp bounce and a trend reversal bounce is what separates a 90% win rate from a 60% one. :::

The Greed Check

At first, taking 25% will feel inadequate, especially when price later bounces 75%. That feeling is the enemy. When it happens, the response is not to change the rule — it is to re-enter on the next setup and capture the second move.

Cap risk at 1% per trade. Run this system for one month. The compounding effect becomes visible quickly.

// Greed management rule
IF you feel regret after a 25% exit AND price moves further:
    DO NOT change target on next trade
    WAIT for next pullback setup
    RE-ENTER with same 25% target
    CAP risk at 1% of account per trade

Summary

The 90% win rate formula is not a secret — it is a discipline. Aim for 25% of a retracement. Exit. Repeat. When the bounce breaks 75% and fails to make a new extreme, shift to a swing setup and hold for 1R–3R.

The number that changes everything is not a fancy indicator. It is 25.

:::callout[type=tip] The rule in one line: Take 25% of the retracement, stack nine wins, compound the gains. Do not let greed for the full move cost you the high win rate that makes scalping profitable. :::