I would say don't make your win rate your highest priority. It's how much you lose when your wrong & how much you make when you right that will determine your outcome.
How important is the win percentage?
- Thread starter Trade Prophet
- Start date
I would say don't make your win rate your highest priority. It's how much you lose when your wrong & how much you make when you right that will determine your outcome.
Win rate. Reward to Risk. Average win vs average loss...etc All concepts to consider.
But consider this: Take the concept of Reward to Risk. By itself it is meaningless. Unless probability is thrown into the mixture; Reward to Risk really has no useful function.
To say, I only take 3:1 (reward to risk) trades or 5:1 in theory sound good, and is mathematically sound, “in theory”. But unless the probability of the trade actually panning out and being a successful trade (i.e. a trade that completed within the specified R:R) becomes a part of the overall equation the exercise of R:R makes very little trading sense.
But consider this: Take the concept of Reward to Risk. By itself it is meaningless. Unless probability is thrown into the mixture; Reward to Risk really has no useful function.
To say, I only take 3:1 (reward to risk) trades or 5:1 in theory sound good, and is mathematically sound, “in theory”. But unless the probability of the trade actually panning out and being a successful trade (i.e. a trade that completed within the specified R:R) becomes a part of the overall equation the exercise of R:R makes very little trading sense.
I don't look at the win ratio when analyzing a trading strategy, not right away, it's in the short performance report generated by the system and I look at it but I have to say that it's Sharpe ratio i look 1st then it's CAGR, after I review these scan the entire preformed report, but these two are the top of my list when looking at my strategy performance report
Ohh and drawdown of course
Trade frequency and pattern strength are also important.... I used to overtrade out of fomo and get death of a thousand cuts & commish kill (I spent 30k on commishes doing 9k trades in 2018/19 for example). My situation is a bit unique though because I am doing lots of pattern testing to design strategies for my traders.
Lesson learned is be more patient for top setups where you've got a clear edge, eg when I bought MGM near $7 on pivot long, was easy.
Truth be told I still overtrade and am extremely action focused, I love to trade. Thankfully doing so commish free with small size and tight stops keeps costs much lower. I'm trying to ask myself "do I have a clear edge in this chart?" from now on, like my winning TNA breakout trades yesterday.
Lesson learned is be more patient for top setups where you've got a clear edge, eg when I bought MGM near $7 on pivot long, was easy.
Truth be told I still overtrade and am extremely action focused, I love to trade. Thankfully doing so commish free with small size and tight stops keeps costs much lower. I'm trying to ask myself "do I have a clear edge in this chart?" from now on, like my winning TNA breakout trades yesterday.
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Trade Prophet,
Just focusing on making money and doing the right thing daily.
Most people want high win rate
Most people want good R:R
Most people want less R:R
Most people want low win rate.
What do you want?
I personally want decent high win rate and a good R:R equal to 1 or 2.
I want even put the trade on if I do not think the trade can go for R:R = 1 or higher. Cause think about it, if I take 250 trades, I only need to be right 50% time to break even. So that is what I am doing and that is my plan, win more than 60% of the time.
I personally do not want to be losing all the time. So for me, high win rate.
Also, I personally do not want to be in drawdown for long time.
BUTTT, I am a newbie consistent profitable trader, so winning alot more helps for me confidence building.
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So what's the top 3 performance metrics you look at when evaluating a new strategy?
Do you track your performance?
Trade Prophet,
YESSSSS, yesss, of course I do. YESSSSS.
If you are not tracking your trades and the stats, you are bullshitting and wasting time for real for real.
I can not build confidence and trust what I am doing without measuring the performance of what I am doing.
You have to find 1 trading style and get profitable with you are comfortable
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