You are always welcome to prove me wrong Some people are natural genius, some develop it systematically through advanced tools. Being a stupid or a genius is my personal choice. Who are you to question me? Forest is full of wild bulls, while cities full of stupid bullies. Try the bully attitude on some weak minds. (I caution third time that this thread will expose your ignorance (if any). Think twice before you post anything here.)
If you are interested you can post a day chart of primary index (not sector indices like Bank, IT, etc.) and ask more specific questions.
Theory Vs practical Theoretically speaking traders think that a 50% success rate and a 1:2 RR ratio means profit. But there are two practical facts that most traders won't talk about. One is about stoploss... Theoretically price may either hit target or hit stoploss and go beyond. But practically price wont move in straight line and mostly move in zig zag manner due to the support/resistance effect resulting in one more possibility that before forwarding towards the target, price may hit stoploss and then bounce back towards target. Second is about target... Again theoretically price may either hit the target or hit the stoploss and go beyond. Yet practically the target is unpredictable and there is one more possibility that price starts forwarding towards target but wont hit the target and hang somewhere in between target and stoploss. These two facts seriously affect the success rate leading to clueless losses. The solution is to avoid both target and stoploss and trade based on momentum. Human psychology Why most traders wont talk about those "two basic facts" ? Because majority of people have "fear of failure". This fear won't allow them to try and learn something new which means "learning through making mistakes". Everyone have ambitions. But existing skills wont take us anywhere but here. "Fear of failure" will restrict people to stick to their existing skills and expect new results which is not going to happen. Over a period of time they start believing "that is what it is". Traders see the "two facts" but conveniently ignore them because if they consider them then something new has to be tried which may lead to making mistakes, in such a case the "fear of failure" won't allow them to do so. These traders start believing in absolute logic and absolute theories and totally avert basic or practical facts and ridicule creative or lateral ideas.
"Short-term" is not the key word. "Forecast" is the key word in "short-term forecasting" and each forecast comes with target price and stoploss. Too much of fear and greed factors makes the price swing heavily and easily hits stoploss. If at all the stoploss escapes there is no guarantee that the target will be hit. Both target price and stoploss are the "REAL" culprits in the "so called" short-term investments (or positional trading or intraday trading). In investments there is no concept of forecasting and hence no target price or stoploss. Anything other than "long term" is trading only. There is nothing called "short-term investment". "Short-term" always means TRADING because they always come with target price and stoploss. Buffet will never use the phrase "short-term investment" because he knows its a self-contradicting phrase. Only a financial illiterate will use such jargon. It needs insightful eyes to see what what others miss to see. Business is only for insightful people, not for knowledgeable perfectionist bio-robots. To know why most traders think like robots...
Impact of risk reward ratio on success rate Price won't move in straight lines. Due to the fear and greed factors of market speculation, they move in zig zag manner, the edges of which we call as supports and resistance. This zig zag movements increases the probability of hitting the stoploss, and hence affecting the success rate, in the following ways. A 1:1 RR ratio has 50% success rate. 1:2 RR ratio has 33.33% success rate. 1:3 RR ratio has a success rate of 25%. With a 1:2 RR ratio if a trader experiences more than 40% success rate, it simply is a temporary luck because not even a genius can predict a target. More details as follows...