+1 or does not trade at all. It has been my experience with running loads of statistics on any type of system you can dream up that there are 4 basic things needed for a "profitable" system. This also assumes your system "triggers" enough trades to place in a years time. 1) High win rate 2) High Profit factor 3) High Expectancy 4) LOW standard deviation. In general you need AT LEAST 2 of the first 3 in the list!! A profitable and tradeable system can have any ONE of the first three be LOW but the other 2 MUST need to be HIGH. As for standard deviation it will only amplify the results if the standard dev. is low but this too is NOT absolutely needed....MUCH more prefereable but not needed. That summarizes everything you need for a good system as succintly as possible. The debate in this thread has been idiotic in many ways because people are equating win rate with profit and as I have said countless times win rate has less bearing on profit than on draw down and equity swings. Some of you can not seem to get that in your heads and that is where my frustration lies. The people that keep saying "win rate means nothing because you can have a profitable system without a high win rate" do not grasp that concept and have obviously never run any stats on their or anyone's systems to be able to see what in fact changes with win rate. A lottery is a perfect example of a profitable system with a low win rate. There your chance of a "win" is say 1 in 60 million and IF you win you would win $100 Million. Do you guys trade thinking the market is a lottery? You would have to enter millions of tickets to be increase chances and STILL be lucky enough to profit $100 million. Many people could enter millions of tickets and NEVER WIN!!!It really is that simple to understand but,...sadly many of you dont get it.
Yup. Most who say very low win rate is fine, simply don't have experience of trading real significant money account and having losses after losses, seeing a drawdown of like 50% (or even more) and many other "cool" things. Or they would be looking for much smoother equity curve and more comfortable emotionally systems.
The benefit of statistics is that you can make up any theory you want and then find the statistics to back them. But in the real world its different. Look at the journal where the guy talks about the real way to trade fibs, and now has a $ 70,000 draw down. If we fall back into a recession eventually the market will fall enough to wipe out his account or give him a margin call. This is the difference between reality and fantasy. You are assuming things not in evidence. 1) You assume a winning trade of $ 44,000, and avg loser of $ 269, but don't provide a real money system that actually does this in the real world. 2) You ignore real money trend systems like Turtle Trading where the actual win% was much higher since like I mentioned before, the market can trend more often and for longer than most people can remain solvent betting against it. 3) If you look at statistical results from actual systems like the over 3,000 on C2, you will see both the low win say under 10% and the high win say over 90% fail. You need to use scientific method. Come up with a theory or system, then test it in the real world to see if your theory is valid. If it is then go forward.
Look, on C2, they don't provide the system ie how they generate the results of the trades, they just provide the statistics for example win rate, draw down, profit factor. That is what I am talking about. Since out of 3,000 none can come close to being profitable and do what you are talking about, then you are referring to a failed system.
Also, the problem with your poll, is you have people lying when they click on it, so its meaningless. If you really want to learn something about statistical edge, go to C2 and review some systems.
c2 doesn't show unrealized gains from positions that are in profit and will still be in profit for years. All it would show is all the small little losses if someone tried to replicate a low winrate system which cuts losers and holds onto those "lotto" winners. Who says a low winrate system would have targets for the winners? In fact the system I was talking about earlier has a 1 year timestop on all profitable positions. c2 cant model such system. I'm not here to convince anyone. To each their own and whatever works best for you use it. I dont live and die by low winrate stuff lol its just a small part of my toolbox that a small portion of capital goes to.
Because the difference in having a trend following system with an edge is that you can have rules that determine when a trend ends which is what the turtles have. Since trends like bull markets do end, it can be measured in time even if a trend goes for 5 years. Otherwise you have a buy and hold strategy, where you hope there is not a black swan waiting to erase all of the gains.
in real numbers 2-3k risk 50-80k rewards 30-40% win ratios. ========== 1. anything less in winratios, i have to recheck my trading theories, <b>to stop entering shitty trades.</b> 2 anything more.. i just make more money to spend on useless shit. 3. enter less, bet more.