How important is the win percentage?

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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hahahaha

i wonder why hasn't elite trader got as big as social media companies out there ? Am sure this has its own thread somewhere
 
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 the human desire for comfort & loss aversion, doing what is comfortable will never never make you a profitable trader.
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Thats like what william echardt said that humans tend to maximize the chance of a gain rather than the gain itself i think this is true even outside trading
 
“It all depends”

1. A Hedge Fund whose strategy buys OTM options looking for that big hit - sure, 10% of the trades account for 90% of the profits.

2. A prop firm like DRW with 1,000 employees that arbitrage and make markets in all things from the mundane to the exotic; exchange and OTC-related - no way, they have at the very least a 50% hit rate.

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 the human desire for comfort & loss aversion, doing what is comfortable will never never make you a profitable trader.
More...
 
Scataphagos said:
95% win rate? That's a load of bilge for retail screen jockeys. (Maybe for front-running HFTs..)

95% win rate and still blow out your account? Ridiculous. If you're smart enough to devise a 95% win strategy, you couldn't possibly be naive/stupid enough to lose all your money with it.
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Yes you can by never closing a losing trade, thats how you achieve such high rate but then your carried out side because your account is liquidated
 
Scataphagos said:
What's smart about that? You could get 100% win rate if you counted only your profitable trades.
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what iam saying is some people do that hence its possible they cling to 95% win rate but one bad tradr blows their account up
Just like selling naked options

this is along the lines also of maximize chances of a gain rather than the gain itself
 
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