How important is the win percentage?

Trade Prophet said:
Equities and ETFs, these strategies run at around 40%
And options, here it's a split vote - selling runs at around 65% and buying at around 30%
But again due to the explosive potential of buying options, the winners make up for the losers
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Thanks.
 
Ken Grant is a risk consultant to many of the super star traders & firms. He reviewed raw brokerage records of the best traders and this is what he found:

"Across all market conditions, trading styles, time frames & traders, one rule holds true: 5-10% of all trades account for 90% of profits."

"I know of many portfolios that are so effective in their actual trading/execution and risk-control practices that they make large sums of money in a consistent, risk-adjusted manner with win/loss percentages in the low forties or below. The trick, of course, is to make sure that your winners pay off at higher multiples than those of your losers."

High win rates appeal to the human desire for comfort & loss aversion, doing what is comfortable will never never make you a profitable trader.
 
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systematictrader said:
Ive always wondered what does OP stand for ?
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A moderator here at ET told me the OP referred to the person that started the thread as in "thread starter".

I replied...why isn't it then TS ?

He replied...technically its the "original person" a phrase from the old messaging boards online prior to Elitetrader.

I replied...heck how old is Baron (ET owner) ? He must be in a nursing home. :D

wrbtrader
 
wrbtrader said:
A moderator here at ET told me the OP referred to the person that started the thread as in "thread starter".

I replied...why isn't it then TS.

He replied...technically its the "original person" a phrase from the old messaging boards online prior to Elitetrader.

I replied...heck how old is Baron (ET owner) ? He must be in a nursing home. :D

wrbtrader
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Without referring to a person, some people consider OP to mean "Original Post" or the first post that got the discussion topic going.

And just for the record, I'm 48. No nursing homes for me yet. :thumbsup::D
 
comagnum said:
Ken Grant is a risk consultant to many of the super star traders & firms. He reviewed raw brokerage records of the best traders and this is what he found:

"Across all market conditions, trading styles, time frames & traders, one rule holds true: 5-10% of all trades account for 90% of profits."


"I know of many portfolios that are so effective in their actual trading/execution and risk-control practices that they make large sums of money in a consistent, risk-adjusted manner with win/loss percentages in the low forties or below. The trick, of course, is to make sure that your winners pay off at higher multiples than those of your losers."

High win rates appeal to our human desire for comfort & loss aversion, doing what is comfortable will never make you profitable.
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Brilliantly written and spot-on true. A lot like the Pareto principle type thinking, eg 20% of trades account for 80% of profits.

Lol re old, OP I'm 56 and remember dialup 56k modems, wildcat BBS boards and cool ASCII welcome screens.
 
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With proper risk management, you can be a profitable trader with a 50% per trade win ratio or less. Sometimes I hope my initial trade goes the wrong way just so I can ride the correct breakout or breakdown with ~3x the previous size.
 
Scataphagos said:
More important is risk:reward ratio and that you trade with stops to eliminate possible large losses.

The win percentage will take care of itself.
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I basically agree with you but some people such as Boris Schlossberg (CNBC FX commentator and Kathy Lien's business partner) are strongly against 'risk:reward ratio' concept. Once he even said it's the biggest BS he's ever heard. :wtf: Interesting......
https://www.bkforex.com/boris-schlossberg/the-counter-intuitive-nature-of-riskreward-ratios/
 
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