Expected Win/Loss ratios

Discussion in 'Options' started by RunTrade, Nov 4, 2005.

  1. Just curious as to what some others use as their expected/goals for a win/loss ratio when trading options.

    Understood that the better you are (more experienced :p ) you may expect a higher ratio. I've heard claims of pros hitting low 90% winning percentage...I find that hard to believe, but not unbelievable. Is 70% realistic, 65? 50?

    I have several approaches mapped out as of now....specifically I am favoring a strategy where I am looking for an average winning trade to bring +45% and an average losing trade @ -88%. With those expectations I would need approximately a 66.2% winning ratio to B/E.

    I wont get into details of the above strategy, but it is arranged to target a 60-70% winning ratio (the allowance of 88% loss is somewhat inflated as a cushion).

  2. ozzy


    Depends on the type of trader you are and the strategy you employ. Personally, my goal is to have an average win/loss ratio > 1.5.
  3. and you have found that this 60% goal is attainable, under your strategy? do you have a large earnings%/losing% allotment with this goal?
  4. ozzy


    Here's the spreadsheet I use.

    November so far.

  5. ozzy


    I'm not too concerned with winning % on lower t/f trades. With my strategy I'm content with 45-60%.

  6. Thank you...and nice set up I might add... although I guess what I'm asking is, what profit percentage do you pull out out and whats the stop loss if you will in percentage? Or do you simply try to play out each option to the best of the data and predictions you have computed (intraday even)?


    PS: It appears your "AVG Win/Loss Ratio" is off...unless you are factoring something else in I dont see.

  7. oops...didnt see this post thanks!

    Don't you have to watch those numbers though? The combination of your avg.profit% and avg.loss% could be sending you in the red over the long haul.
  8. ozzy


    I trade the ER2.....

    ** My stop loss is set to 0.6
    ** My profit target is to get much as possible. So my exit rules vary.

    The average win/loss ratio is a number based on a dollar value which is calculated by (avg win)/(avg loss).

    Hope I answered part of your question. I'm not an expert on this stuff. I'm sure others will respond with greater insight.
  9. ozzy


    I can take in 5+ points/contract with a winning % between 45-60% (I don't worry about this number too much). Anything drastically lower than that number in combination with a specific cut-off point would result in me pulling the plug for the day.
  10. gotchya.

    However, I know very little about the ER2...:confused:

    but I figure I'm doing pretty good for first looking/studying options one week ago...I spent all of yesterday tackling the B/S method:p

    #10     Nov 4, 2005