Can Anyone Become Ever So Slightly Successful In Trading.... With Only About 40% Win-Loss Rate? Many trading gurus, educators, schools, live trading rooms and numerous other trading entities would almost guarantee a much higher success rate for their students, if only those students would keep on paying their fees and try harder at practicing trading and attaining the 70-80-90% success rate as proposed by the more seasoned trading educators. Well, what do you think? At what proper win-loss trading rate, for example, 90-80-70-60% or even less than 50%; can a trader attain the status quo of becoming a respectable consistently profitable trader of sort....? Any creative thought or idea.... to share or to encourage those just learning how to trade to survive a little longer, richer and happier.... before most would become so enragingly disappointed with trading toward a handsome life style....?
I have a begrudgingly disappointing example of a trader who could only attain only 42% win-loss trading rate, to share with everyone this coming Thursday, July 6, 2017. Any advice, with much appreciation, for this poor disappointing 42% win-loss ratio trader.... who won't quit and won't listen to anyone....? Just incline toward the generous humanitarian side to offer advice, if you so desire, K? Thx much everyone.
Can Anyone Become Ever So Slightly Successful In Trading With Only About 40% Win-Loss Rate? Trading is all about learning to lose which goes counter to human psychology. Every aspiring traders wants to believe there is a gentle easy way to make it unscaved in a very tough arena with few winners. Washed out traders turn their sites on shilling newbies on their comfy magic high win rate courses. Most successful swing traders expect only about 10% of all their trades on a given year account for the profits. With the avg win rates are about 40-53%. The reason for this; the avg losers are a lot smaller than the avg winners. Peter Brand is considered to have one of the highest multi decade RORs at 50%.
Yes. It's not uncommon to have a win loss ratio below 50%. You just need your wins to be bigger than your losses.
If you post a PV chart showing what you see when you took an example losing trade that would support the effort. Best if you could post it without any of the bar's that came after your entry, then one where you exited or were stopped out after the first chart is debriefed. Hide the symbol for even greater effect. This way we limit the armchair 20/20 hindsight commentary.
ABSOLUTELY,.....Assuming the trader has Good Risk Management Skills! I think this is an area of confusion that people try to rehash over and over. In a nutshell WIN RATE determines MAX DRAWDOWN. Thats why you care about win rate. The lower your win rate the LONGER your MAX losing streak will be. The longer the losing streaks the more drawdown you get. Simple. On a coin flip type systen with 50% win rate you can have a MAX losing streak of something like 10 in a row. Each "coin flip" trade is INDEPENDENT of what occured on the last "coin flip" trade. A win on trade #1 does NOT determine whether trade #2 is win. So the lower your win rate the more losers you can have in a row. The more losses in a row will determine how much your account loses will damage your account. THIS is why limiting risk to about 1% is crucial to successful trading. Imagine 19 losses in a row with a system of 40% win rate and if you are risking 1% each trade you are down 19%. If you risk 2.5% per trade you are DOWN 2.5 * 19 = 47.5%. Likely resulting in a blowout as you try to make it back and stop following your rules when in fact you just have a normal distribution of wins and losses based on your system. The key is to get win rate as high as possible and limit losses to as little as possible per trade. Imagine a $100K account with 1% risk per trade (1R = $1000) but your average loss is actually only 0.6R ($600) because you tighten stops as the trade matures and you realize its going against you. This is going to dramatically effect your lowest return possible. Do a Monte Carlo Analysis on your trade system or just plug in numbers to a MC Analysis and play around with it and this becomes obvious. Here is a FREE MC Analysis tool to look at what I mean. See for yourself. https://readtheprospectus.wordpress.com/2009/04/02/monte-carlo-trade-system-simulator/ Trade what you see, Eganon
If scalping, your losing % has to be under 5%, least for me, I never ask who or what others do and none of my business what they do, not going to make me any better. Day trading comes down to reward to risk based on min of 3,000 trades as you can get clear idea what R:R to better understand what is highest losing percentages can be. In day trading I think losing percentages means more than winning percentages to me. In my long term commodity trading, I ave between 5-15% winning percentages and don't have losing years as I have gotten very good at hedging, doesn't mean each year cleaning up, far from it and often barely up on the year, will do anything to be little positive on the year including credit spreads on commodities. But the good years which is 1 in 4, you can do way over 100% returns if you have smaller account size. Also, trading long term stocks hedged has bigger winning percentages as markets lean on going up, in both instruments you force yourself to study much to better understand when markets are likely to reverse so you can hedge open profits by using options or using futures to hedge stock positions. More you study is never lost. Scalping and day trading is toughest to learn though, not cause it has more rules than longer term as they both have about the same, but the speed to memorize and being able to recall in nano seconds. And why this trader has had to retire from trading manually and gone to automation. Anyone every say Gum scraping is not too bad, removal of bone spurs due to teeth removal, they had to be on bottle of Jim Beam, damn my lips and gums looks like I was loser of fight between a midget and me.
Here is a no B.S. article on win rates which jives with nearly all the well recognized pros say in interviews, right to the point. I had a win rate of 95% once, it lasted about 5 minutes. http://www.lonestocktrader.com/make-money-trading-positive-expectancy/
I have always a problem with Monte Carlo simulations. To me they sound like nonsense in relation to trading. Why? Markets are not efficient, so these simulations are irrelevant to me as they assume perfectly efficient markets. Monte Carlo simulations ignore everything that is not built into the price movement (macro trends, company leadership, hype, cyclical factors); in other words, they assume perfectly efficient markets.