Can Anyone Be Successful In Trading.... With Only About 50% Win-Loss Rate?

[nakachalet]

But then the market seemed to oblige a little more,
cooperatively. Stops were readjusted to reap whatever
the market was willing to give at that particularly moment
in time, with a gleeful heart and a big thank you, indeed.

 

[comagnum]

It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong. George Soros

 

[aquarian1]

Of course one can make profits at less than 50% win if one's wins are bigger than one's losses.
How does one know this?

---------creative ideas -----------
The reason I said it didn't seem serious is that you also asked for creative ideas and you can get those unless you are willing to speak of your setup and how to improve it. This is NOT a request by me asking you to post your setup. If you have a setup with an edge you must keep still about it. It you have a theory of a setup that with improvement you feel might give you an edge then you could post your theory and ask for ideas to be send to you privately.

That requires posting a clear well-annotated chart examples of how it doesn't work.
---------------
It is all very nice for people to post of traders who make profits and <50%.

Usually you have various setups and each one has (or should have) a target it measures to (MM). If setup E occurs very rarely but has a MM of 5 you know better if you should state more on it.

so a roulette table has a <50% odds on the red/black dues to the houses 0 and 00. Yet the RR is always 1:1 - so you are guaranteed (at least statistically) to lose over the long-run.
What you are looking for in trading is a red/black where under certain conditions black pays 5:1

Bottom line in my opinion is keep looking for good setups with both a high percentage win rate
AND
a high measured payout.


Thanks for a pic of the fruit stand - .

 

[volpri]

Win/loss ratio does not determine your profitability. You can make a profit with a win/loss ratio of 20%. The figure you want is expectancy. Google it.

Not me. I am a scalper. I don't think that works out too good for a scalper. He has to pick high probability trades and if he does he should have a high win rate. And because his trades were high probability he should be profitable providing his average win is bigger than his average loss. It all works together, not one, to the exclusion of the other. At least for scalping. Never heard of a scalper with a 20% win rate that could make money.

I prefer to have an average win bigger than an average loss but coupled with a high win rate, say 70% or more.

I say any trader should strive to design a system with a high win rate. Why create and trade a system with a low win rate?

I actually lean towards thinking the expectancy calculation is a comfort blanket for traders who have not been able to create a high win rate system or methodology. My opinion. Could be wrong. Maybe some folks just enjoy a low win rate? Who knows?

 

[Freestyle888]

This.

It's always possible to win on a low winrate system (see for example Black swan style betting), over a very very long time horizon with proper calculation of odds v payoff, but short term it is not reliable. You also become too dependent on lower frequency wins to make payoff, and temptation will be to pyramid, leverage and oversized the bets, when you really want proportional unleveraged bets to avoid gamblers ruin. That is, you prefer to rely on an averaging process (where most of the odds are in your favor) and not a fail tailed probability betting system (where payoff is bigger but lower unconditional odds).

A low winrate system is definitely inferior, and such a system cannot be relied upon as a proper business. It should remain strictly R&D or paper traded until developed further, or start again from scratch.

Not me. I am a scalper. I don't think that works out too good for a scalper. He has to pick high probability trades and if he does he should have a high win rate. And because his trades were high probability he should be profitable providing his average win is bigger than his average loss. It all works together, not one, to the exclusion of the other. At least for scalping. Never heard of a scalper with a 20% win rate that could make money.

I prefer to have an average win bigger than an average loss but coupled with a high win rate, say 70% or more.

I say any trader should strive to design a system with a high win rate. Why create and trade a system with a low win rate?

I actually lean towards thinking the expectancy calculation is a comfort blanket for traders who have not been able to create a high win rate system or methodology. My opinion. Could be wrong. Maybe some folks just enjoy a low win rate? Who knows?

 

[volpri]

This.

It's always possible to win on a low winrate system (see for example Black swan style betting), over a very very long time horizon with proper calculation of odds v payoff, but short term it is not reliable. You also become too dependent on lower frequency wins to make payoff, and temptation will be to pyramid, leverage and oversized the bets, when you really want proportional unleveraged bets to avoid gamblers ruin. That is, you prefer to rely on an averaging process (where most of the odds are in your favor) and not a fail tailed probability betting system (where payoff is bigger but lower unconditional odds).

A low winrate system is definitely inferior, and such a system cannot be relied upon as a proper business. It should remain strictly R&D or paper traded until developed further, or start again from scratch.

I agree it is possible even with a 10% win rate but why would a person want to trade that way is my question???

 

[Mtrader]

I agree it is possible even with a 10% win rate but why would a person want to trade that way is my question???

If that is the only option he has. People always take the best option.
Better 10% with profits then nothing.

 

[rajesheck]

Hope this gives a different yet valid view point:

Impact of risk reward ratio on success rate

Price won't move in straight lines. Due to the fear and greed factors of market speculation, they move in zig zag manner, the edges of which we call as supports and resistance. This zig zag movements increases the probability of hitting the stoploss, and hence affecting the success rate, in the following ways.

A 1:1 RR ratio has 50% success rate. 1:2 RR ratio has 33.33% success rate. 1:3 RR ratio has a success rate of 25%.

With a 1:2 RR ratio if a trader experiences more than 40% success rate, it simply is a temporary luck because not even a genius can predict a target. More details as follows...

Your Analytical Skill + Stock Trading = POISON

Brokers know nothing about how to make money in trading business. All they want is to promote trading somehow. A simple way is to make people to believe that trading is simple and profitable. They promote useless tools and worthless training to people. All they want is brokerage.

Stock market is the most speculative business in the world. It needs quick decision making skills to survive. There is absolutely no scope beyond a simple prediction based on a short lived momentum.

Please apply your analytical skills somewhere else but not here. All your analytical skills are meaningless in a high speculative market like stock market. I know these words will hurt your ego. I am just telling the ruthless truth about the merciless stock market. No mercy shown here and no amount of analytical skills are enough.

Don't believe me when I say short-term forecasts are myth. See how Warren Buffet warns to other investors about short-term market forecasts. Not even a genius can predict for short-term investments or for a trading. So please save your analytical skills for something else.

I suggest a trading strategy with no target and no stoploss:
https://www.elitetrader.com/et/threads/moment-by-moment-mbm-trading-strategy.310899/

 

[Sprout]

If that is the only option he has. People always take the best option.

Although at times true, not always. Just look at lifestyle. Lot's of folks have habits detrimental to their own health and well-being.

Eating poorly, lack of exercise, alcohol, drugs, etc.
Yelling at your kids, yelling at your parents, etc.
Not heeding more informed advice and opinions.

Lot's of examples where people do not take the best option.

It's like they are taking the opposite. I do it myself in certain areas of my life.

As for the 10% win rate, lot's of folks play the lottery as well as come to the markets with a lottery mindset.

 

[volpri]

If that is the only option he has. People always take the best option.
Better 10% with profits then nothing.

Its not the only option. There are lots of better options. He/she just has to put the time in to find them. 10% is better than nothing but the risk to gain that is not worth it IMO. To me it is ridiculous to settle for a 10% win rate system. Just put the money in cd's or money market with no risk (theoretically). Make less than 10% yes but don't have to worry about it.