In real life, you do not know that your 1k trade is going to make 5k or vice versa. Also, if you do have a low win-rate, then your trading is worse than naïve. What that means is that you are worse at picking opportunities than randomly guessing. You have no skill.
That's true. Each individual trade is a bit of a gamble, but overall I have a positive expectancy because I have experience of instruments that I trade, I don't abuse leverage, don't trade within noise of intraday, etc. Today could have been a bad day, tomorrow may be a better day, what matters is the final result. People like you must see green every day, this doesn't exist, it's a fantasy.
Just make sure that positive expectancy is based upon real skill (your edge) and not randomness. Otherwise, you will just bleed away your chips.
Win rates mean virtually nothing, what matters is the sum of winners being larger the sum of losers (profit factor). MAE(max adverse excursion) is a much more important metric, it's an early warning your heading down a slippery slope. Over the years I have seen most traders fixated on high win rates & tuned out to risk/trade mgmt blow up, while many with lower win rates & strong risk/trade mgmt do very well. Risk/trade mgmt defines your equity curve over the long run far more than trade entries ever could. It's that one thing traders have full control over. What feels good with trading like a high win rate, will never get you the big $. This is why the top earning traders & firms focus primarily on risk/trade mgmt & managing discomfort. Often volatility & big whipsaws rinse out most traders before the real move - this is often where the large asymmetrical outcomes are made. Your win rate drops sharply as you take numerous small loses trying to get positioned until you get a home run many fold over the loses.
You need an edge AND risk management. An edge helps you find the trade. Risk management helps you survive. No one uses "MAE" in the hedge fund/investment bank world, fyi lol.
Agreed you need an edge. To me that is a defined/disciplined method for interacting with the market. Edges can be fickle & fleeting, subject to variance. An edge will only be as good as the sum parts of risk/trade mgmt & mind set, etc. Having a lot of experience & good instincts can sure help with having a edge that is adaptable over time.
Outstanding thoughts. I think win rate isn't very important vs risk/trade management with edge. To me edge is based on range, extremes, trading the widest range high volatility charts. And a few simple strict rules, eg for swingtrading I always add to 2day high breakouts and stop out just under 2day lows. Edge, price action/range and risk management is everything. Testing is key.
Correct imo win rate not important. One could (and I lean this way) find stocks which are high risk high reward (smaller cap). So the result becomes numerous losses, then one stock kicks in with a very high reward which more than pays off the numerous small losses. But, keeping on topic, you definitely need an edge when trading this way. What also happens with this method, numerous large drawdowns where weak hands will sell which increases again the loss rate, where if you know what you're doing, one rides the large drawdowns. As is per text book trading, pain to be expected, the least obvious trades (those looking sick) are usually the best outcome because obvious trades usually disappoint.