As a trader you are supposed to embrace the rain (losses) Every time the OP takes a loss i suggest he listen to this song: "Let it rain over me"
Hello Millionaire, This is the best statement I seen ET in a long time. I haven't seen zero proof yet.
Knowing a win rate and risk metrics help you size appropriately. I'm not sure why you think of them as vanity metrics. For example, my main strategy only needs a 40% win rate for a given reward but I'm well above that. I know that if I start seeing worse rates than 40%, I need to take a break. I'm hopeful to learn something from your elucidation.
Hi Millionaire This is actually my song of choice: You are right of course, it could all be baloney. Still, there is enough there to have a look and see how it goes. The only way to find out is to try it yourself and see how you get on. What is your method of choice, and how's it working out?
I have a fully automated system for playing momentum moves. Approx 40% win rate and that is after being selective about which momentum moves to jump on. So lots of losing trades to be expected, but the winners are much bigger than the losers. Such system perform relatively poorly when markets are slower, but better when there is volatility and follow through like this year. This kind of trading requires a lot of discipline and patience and acceptance of losing often, some times I might not be net profitable even after taking 50 or even 100 signals with correct discipline. This is why trading is hard. You can do everything right but sometimes still not be profitable after 10/50/100 trades. What keeps me going is eventually I will hit the jackpot!
Hello Millionaire, Thanks for your input. Question please: 1. From your experience trading and reading other retail traders journey, do you believe a Manual Trading Trader can trade your system by hand day-to-day for the next 5 years with a 40% win rate if you never gave them or showed them the performance or track records of the system initially?? Yes or No
That's interesting, thanks Millionaire. I have experimented a lot with automated systems, and have found the same as you. A lot of them look fine on backtest, but typically perform much worse going forward, which is to be expected, and spend a lot of time in drawdown. It's also hard to restrict projected drawdown to a manageable size without limiting potential gains to make it hardly worth the bother. Still, it's an interesting puzzle, and as you say, one day it might pay off. I think it is possible to win at day trading, but it is very hard, and the key is patience. I watch the markets on and off all day looking for possible entries. I have made one trade all day today, which was a profitable short on the FTSE. Someone once recommended that eliminating the bad entries taken through boredom or false optimism is the best way to get profitable, and I think that is probably right.
What I am saying is that most novice traders blindly seek a high win rate, which make them feel good psychologically. However, by narrowly focusing on this effort the trader loses other more important metrics, such as R/R ratio, etc. In no way am I against measuring the win rate. It’s a useful metric by itself.