The only thing that counts is that win rate * average win - lose rate * average lose > 0. You need to backtest your method sufficiently (I prefer hand testing) to verify over significant volume of historical data and markets.
Low winning percentage trading requires good psych to avoid the pressure and the tendency to take early profits to book a winner. Ah, another law of finance holds: low risk = low return and vise-versa.
I don't think that massive risk with a large % position is a good idea. It's only a matter of time before you lose big. There is another way to trade a large % position with small net risk .. that is to add to the position at logical points as it progresses and move your stop. Many times this has allowed me to more than double my size on the winners whilst reducing the net risk on the position.
My message was towards discretionary traders who have to deal with their emotions which usually impede success. Mechanical trading just needs an edge and a robust profitable system. I don't trade mechanically, because markets are d ynamic and one system that works well in one type of market will flounder in another type.
There are 2 ways of "trading less". One is take less trades. the second is taking the same # of trades but allocating less shares per day. you can usually apply one [or both] of this approaches to avoid over trading.
Whenever I am on a bad streak it is always due to overtrading. On ES I find if I make less than 15 trades per day my profit is high. If I double that I normally break even, and if I triple that I always lose money. I think it has more to do with taking less than perfect setups when you are losing as you try to get back to even. Now I don't worry about that anymore. If I lose, I lose, but I will only take the best setups.
I think old Jesse said it pretty well in Reminiscences: 'I will say this again, I never made my money trading; I made my money by sitting tight.'
great advice about letting the winners run & trade less BUT how do we know if we have a winner? any thoughts? thank you~
If by trading less you mean open a trade and let it run, there is truth to that depending on the context and strategy used. The problem that people have, and that all these threads have, is that they never give the reason for why should this be so! So give the reason for this in a way both the heart and the brain accept it!