Better Win Rate or Higher RR ?

[murray t turtle]

This is a small trick I used to help me, maybe it will help you. Take half off at the target and leave rest at breakeven and manage that trade separately.

Eventually, you'll have some idea of when you *should* let things run and it becomes easy to let it be and go do something else.

You can also start out making sure you are entering a trade that can give you a potential with multiple targets.

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That works well, very well, with good trenders. I do like the last half ,a bit more profit than break even stop; even though sometimes occasional gap will wipe out profits, last half......
WHEN i used to trade single stocks, regular, I positioned sized it IF a 50% gap happened\ = OK.

 

[volpri]

Profit return is always more important than win/loss rate. With a high profit return, regardless whether the win/loss rate is high or low, you will always come out on top but if your profit return sucks each time, you would need a very high win/loss ratio to make money and if your win/loss ratio happens to suck as well, then you won't be making any money. Having a high profit return each time you trade just gives you so much leeway and flexibility in terms of win/loss rate i.e. even if you don't make money each time you would still make money overall whereas if your profit return is low on each trade, then you would have to absolutely have to make sure that you win each time you trade otherwise you just won't make money at all.

Take your example, even with a high win/loss rate of 80%, when the profit return is at 3R, the overall profit is still lower than a win/loss rate of only 30% but with a windfall profit rate of 10R even if it gives you the psychological satisfaction of winning more often. And imagine if you just improve the profit multiple by just 1 in the high win/loss rate and low-profit scenario to 4, with the win/loss rate remaining at 80%, the overall profit becomes 3.2, easily beating the high-profit, low win/loss rate scenario.

Frequency of profitable trades HIGH WIN RATE over same time period required to make the one high profit low win rate blows the latter out of the saddle. Not to mention compounding. One can potentially become the fastest discretionary trader ever! ROFLMAO.

 

[nooby_mcnoob]

%%
That works well, very well, with good trenders. I do like the last half ,a bit more profit than break even stop; even though sometimes occasional gap will wipe out profits, last half......
WHEN i used to trade single stocks, regular, I positioned sized it IF a 50% gap happened\ = OK.

Exactly. When I start the day, I have _some_ idea of a trend day developing. Often I'm early by a day or so, which means I need to take this into account as well. But... Trend days + runners = free $$$.

Most days are not trend days though. When I am near resistance, I'd rather just take the money and run than "hope".

 

[murray t turtle]

Exactly. When I start the day, I have _some_ idea of a trend day developing. Often I'm early by a day or so, which means I need to take this into account as well. But... Trend days + runners = free $$$.

Most days are not trend days though. When I am near resistance, I'd rather just take the money and run than "hope".

%%
Good shots so to speak. THAT video above you, wow,, that six shooter is actually faster than a rattlesnake + much more deadly................................................MOST of my tech ETFs are good monthly trenders, past 10 years. Nothing like good monthly trend, even though 4 hours charts are helpful some times.
But with seasonal SEPT sells, sell @ resistance, or sell early LIKE that six shooter= fast.,

 

[nooby_mcnoob]

%%
Good shots so to speak. THAT video above you, wow,, that six shooter is actually faster than a rattlesnake + much more deadly................................................MOST of my tech ETFs are good monthly trenders, past 10 years. Nothing like good monthly trend, even though 4 hours charts are helpful some times.
But with seasonal SEPT sells, sell @ resistance, or sell early LIKE that six shooter= fast.,

Indeed, past 10 years have been fantastic for trending. I hope my new skills carry me for the upcoming 10...

 

[murray t turtle]

Frequency of profitable trades HIGH WIN RATE over same time period required to make the one high profit low win rate blows the latter out of the saddle. Not to mention compounding. One can potentially become the fastest discretionary trader ever! ROFLMAO.

%%
Good shots volpri. WOW that speedy six shooter maybe faster than a rattlesnake or Herb Parsons. Winchester -Western hired him in 1929. He love to shoot washers, ''ding'' out of the air. One time it seemed like he missed?? ''I shot thru the middle of that washer''/LOL Herb Parsons said. Then he said bring me a postage stamp , stuck it to washer+ proved it, by the hole in the stamp. He was old school/told the truth!!
MOST millionaires in the stock market are market makers or investors buying very month for 40 years........................................................................................................................

 

[KCalhoun]

Win rate is totally irrelevant, many of my most profitable days I'm making 30-40% wins. Lots of tiny stops, fast draw shots, outdone by wins whose aggregate profit is larger, is what counts.

eg 20 stops at average $50/stop = $1000 loss, VS 10 wins at average $140/win = $1400 yields net $400 profit being right just 33%.

Like ddog said, whatever makes money is what matters.

 

[fan27]

You will never get to KNOW that. When you get it right, you will have guessed correctly. IOW... making a large gain is difficult. The market will give you every opportunity to turn a potentially large gain into a small one.

My new policy is to sell half the position once the trade hits a 20% gain and let the other half "ride". Here is a recent trade I had...30% gain to break even. Selling is the hardest part.

 

[Overnight]

Would you rather have a 30% win rate and Average 10R on trades, or 70-80% win rate with 2R-3R ??

Personally, i have tried both and the latter one suits best for me.
a steak of losses does affect decision making and psychology
I'd rather make small gains but consistently, than one home run after 15 losses in a week.

Have you ever taken your own combine test/trading deal, as your company rules dictate? If so, how did you do?

 

[volpri]

Ok ok ….if no one wants a high win rate and had rather have a low win rate how about a high win rate that scalps AND at the sama time lets runners run for those great big wins. Win/win?? Or something wrong with that too?

Why in the same hell would anyone prefer a low win rate? A trader can only make money on wins. A volley ball team only gets the championship by winning. Bama was number #1. They lost 1 game and find themselves at number 5. They lose a couple more games maybe just one more and they can kiss the championship goodbye. Tampa Bay Bucs win because they got a winning quarterback. Yes, a quarterback who believes in winning, not losing. Mr Brady does those things that make for a winner. His lifestyle he adjusts to keep him winning.

If a trader has a low win rate is something wrong?? Why be happy with the “Hail Mary” pass of trading? Yes, make those trading first downs! Make those trading 3 down conversions. But don't get in the red zone and can’t punch it in. Leave a trading “runner” for punching it in. But failing to make those trading first downs and third down conversion will render a trader to relying on “hail Mary” pass for $$$$. Then there is always the problem of market interceptions and “puke six”. The best defense is a good offense. Those 5 and 6 yard runs and short trading passes keep the $$$ moving down the field. And increase the odds for a profitable breakout that makes even more $$$. The longer a TR goes on the closer to a BO (pass..think a Brady BO pass to Evans) pass event the game is getting. GANN was right “time” factors in.

Trading is a “high performance” game. One has to learn how to navigate the unexpected and the variables and still come out ahead. Relying only on the “big play” is not the way IMO. NEVERTHELESS, a trader should want to capitalize on the big plays when they occur. However, them little plays aren’t to be discounted at least not in my books. LOL.