I would like to conduct a little study on what "the majority" and "the minority" have for statistical win rates in their trading. Please vote. Elaborate with a comment if you wish.
Remember the lower the better! Although trading below a win rate of 35% is a very though way to trade. "The success rate of trades is the least important performance statistic and may even be inversely related to performance." - William Eckhardt
I would partly agree and partly disagree. Win rate is directly proportional to your drawdown rate. The lower probability trade you have the higher your drawdown and thus to limit this you must risk less per trade. A higher probability trade lets you risk more per trade and achieve your goals faster with less drawdown. However, your expectancy will effect you overall profit that you make based on the amount you risk per trade. Expectancy is probably MORE important but probability will effect your account volatility swings as you are less likely to have multiple losers in a row with higher probability trades.
WHY?....a win rate of less than 10% is highly probably NOT a profitable system. This is 5x WORSE than a coin flip. You could flip a coin to tell you to go long or short and do better with good money management (position sizing) rules. A win rate of <10% will have a HUGE drawdown as 90% of winners would lose ON AVERAGE. What happends when that person gets 20 losers in a row? Is that person going to emotionally have enough conviction in their system to continue trading or after losing so much money would they ababndon their system? I suspect the latter. If you risk 1% per trade you have now lost 20% of your portfolio. You MUST have a 25R win JUST to break even. Again,...your win rate is directly proportional to your drawdown rate. That is why most people give a rule of at least 35-45% win rate before you can even entertain your system as a profitable system. Anything less than that is a waste of time and $$$....in my opinion.
Believe it or not. Win Rate = 90% ----------------------- Statistic 100% -> 60% win to minimum target (30% over that & 10% very good over that) -> 20% win almost at minimum target -> 10% win, small profit more near entry, than near min. target -> 10% loss, max. the 1/2 of the current risk of the trade. risk/win rate = mind. 1 : 2 to 1 : 3 to 1 : 4, sometimes 1 : 5... ---------------------- PEACE
No, this sucks hardcore.... it would be awesome, if 90% would reach my minimum target and 50% over that or more. my minimum target = risk/win 1 : 2. So dont think i am Mr. Perfect. I can not do it better, but i try, with making no mistakes. Have a nice weekend