50-60% win rate, 1:2 R/R

N

Naturex

Is this unrealistic, to have 50-60% win rate with a 1:2 R/R. Or is something like this very very rare?

The reason I ask, is cause I looked into risking 50% an account with a sum of say 128$, something that isn't too emotionaly hard to lose.

Then use a double system. So say you start with 128$ then you need 7 net losers to reach 1$. (128 -> 64 -> 32 -> 16 -> 8 -> 4 -> 2 -> 1).

And 7 net winners to reach 16,384$.
(128 -> 256 -> 512 -> 1,024 -> 2,048 -> 4,096 -> 8,192 -> 16,384).

At which point you ideally would start to trade more conservatively.

If we assume your system has a 50%+ win rate, you will have higher odds of hitting 16,384 before 1.

Obviously trading is extremely competitive. So needing 50%+ win rate (with 50% risk) is obviously harder than ~35%+ win rate (with risk 1-2% risk)
 
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If your avg win is 2x your avg loss, over the long-term, in a winning system, you can expect your avg winning pct to gravitate more towards 45-50%. When you get at the avg 60% winners level, long-term, expect your win to loss ratio to drop more towards 1.5. If you're seeing much better results than this then it's either a skew a prolonged period of strong trending or you haven't taken enough trades yet.

Like I've said many times, at the 70% avg winning pct level, avg win vs avg loss gravitates towards a 1:1 ratio (risk $1 to make $1).

Sometimes you'll see people post brokerage statements with fantastic results like 75% winners with an avg reward to risk ratio of 2:1 (i.e. avg win / avg loss). That kind of thing is short-lived and "the math of the market" will correct their out-sized gains over time.
 
Ok, thank you. Then the most reasonable thing is to save up and trade conservatively.
As you essentially "lose" 15% win rate. Meaning if your win rate is 40% (with 50% risk) you will go in a loss over longterm. if that risk is 1% you will profit long term. (And this is excluding the psychological aspect of seeing your account drop 50% every loss, even if you started small).
And in trading it's all about having that edge and being consistent.
Naturex
 
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Very hard to say since win rates only have significance over a long period of time. A lucky streak can give you a 90% win rate for a couple of weeks but that doesn't mean the system is sustainable on the long run. On the other hand you can start with a losing streak and only have 10% win rate the first couple of weeks but that doesn't have to mean the system isn't sustainable on the long run.

My win rate for the past 2 months has been 47% with an average 1:1,66 risk to reward, so i am still making money and from previous information i know the win rate is likely to go higher again, but who knows when, if ever.

I know you are looking for a short period of time to have X number of net winners, but it is impossible to answer. It can go 3 ways, you get your 7 winners very fast, you get 7 losers very fast or you will break even for some period of time.

Backtest your system, make sure you know the likelihood of every scenario, only then you can give it a shot and hope you don't start with a losing streak.
 
Yes, I agree. I was just curious about the likelyhood of having 50%+ win rate, it seems like it's very unlikely. Esp, for a novice trader. And I'm not the person who is willing to keep taking trade after trade for months, knowing that the odds are against me. Esp if you also know that if you had saved up and risked 1% you would've prob made alot.
I joined a telegram group somewhere that was made by a guy that turned 32 $ to 32,000 $ using this system. But instead of trading that money conservatively, he started fresh again at 32 $. I guess he was good at getting those winning streaks, maybe he performed good under preassure. I'm not sure if he managed the feat again as I left the group. But I'm guessing that long term it won't give him consistent results. And the "vibe" in the group was very addictive, people getting semi depressed after a loss etc. Glad i left it, it was more gambling than serious trading. :)

Also he said "if you keep going from 32 -> 1 (5 net losses) you prob should quit trading" but the irony is that if you had only kept your risk to 1% you can have a lot lower win % and still be profitable. (Maybe 15% win rate isn't alot in his mind, but it's huge in a competitive environment.)
 
make sure we understand each other.

win rate : profitable trade including trade where profit is zero.

risk : reward ratio of 1:2. This is target minimum RR ratio.

So your win rate of 50 to 60% is reasonable.
Good thing is that you didn't target very high win rate because you can't earn money
with high win rate.
 
SteveH said:
Like I've said many times, at the 70% avg winning pct level, avg win vs avg loss gravitates towards a 1:1 ratio (risk $1 to make $1).
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Any finance books, research papers that say this is a law of trading/investing?
 
ironchef said:
Same question to you sir, any evidence, studies, research on this?
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I have been trading for decades.

trading coaches ( those who earn money by teaching and not trading) like to advertise that their win rate is extremely high.
because they are trying to entice students to their courses.


newbies also like to target high win rate.
But most of their trades are just a tick or 2 profit.
but when it comes to losses, it could be hundreds of ticks loss.
 
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