Better Win Rate or Higher RR ?

which one would you go for ?

  • Better Strike Rate

    Votes: 3 25.0%

  • Higher % Gains

    Votes: 10 83.3%
  • Total voters
    12
Raheel Shaikh

Raheel Shaikh

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.
 
Raheel Shaikh said:
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 in a week after 15 losses
More...
Latter, hands down.

1) Good for psychology.

2) Good for rendering more trading opportunities in a trading session.

3) Good for compounding profits.

4) Good for more overall profits (through frequency of trades)
 
KGTrader4 said:
Agree with Raheel. But it would be nice to know when to let winners run.
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yes, its not possible to when exactly to let the winners run, because we don't know the series or probability of it.

One thing that i do is when i have a good profit for the week/month
i take 80% of my position out at my tp and let the 20% i let it run with stops at break even.
This is my written plan and there is no place for discretion here. execute it without letting my emotions come in
you can try and let me know how it works :)
 
I will target just an average win rate of around 50%.

I will target a minimum of 3 RR.

so that means I will not day trade futures like currencies,
agriculture/grains/corn/soy/cattle/lean hog ... which tends to have a low RR
 
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Raheel Shaikh said:
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.
More...

I don't think you get to choose.

The highest win rate AND the greatest R/R both come from (1) proper technical entries, and (2) exercising tight stop discipline. IOW... you don't get to choose "either/or". You get BOTH or NEITHER.
 
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KGTrader4 said:
Agree with Raheel. But it would be nice to know when to let winners run.
More...

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.
 
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KGTrader4 said:
Agree with Raheel. But it would be nice to know when to let winners run.
More...

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.
 
Raheel Shaikh said:
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.
More...

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.
 
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