ddav,
I've been trading the TF for 7 years now. It's been my experience that the odds are super low that a 2:1 RR ratio can be maintained over the longer term as the winning pct. approaches 65%+. This is including all trades (i.e., b/e + 1 tick trades do count because risk was taken). The markets appear to follow some general probability rules. There is an inverse relationship between winning pct. and payoff ratio (avg win / avg loss):
1. The higher your winning pct, the lower your payoff ratio is more likely to be.
2. The lower your winning pct, the higher your payoff ratio is more likely to be.
So, for example, if someone told me that they can frequently day trade (5+ trades per day) the TF and produce a long-term (500+) avg. winning pct. of 70%+ (all trades), making a $200 avg win with a $100 avg loss (incl. trans fees), Occam's Razor tells me that that person is not telling the truth. If a day trader tells me their winning pct is super "off-the-charts" high, my first thought is that the person is trading for small tick counts (aka micro-scalping), not points. And when that person loses, he/she stands to lose at least twice as much as the intended gain. This much I now about trading with a confidence level of 99.99%.
Now, take someone like Donna (aka Nod, aka NoDoji). She has a super low losing pct, but here's the catch: an overwhelming majority of her trades are b/e + 1 tick. She's the definitive model of chopping off your losers super quick and chopping off potential losers with the b/e + 1 tick once price has moved in her favor by about 1/2 the way to the target...a very wise approach when trading the CL. ;-)
Go over to futures-trader dot net and download the free Money Management spreadsheet and you can get an idea of what you can expect to make long-term if your numbers have been consistent for 100's of trades. It factors in those b/e trades as part of the total win/loss pcts.
I've seen a lot of people fail at day trading the futures. I don't know specifically what they did wrong because I never had access to their transactions. But what I can tell others who don't want to fail so easily is this [in big, bold print to boot]:
DON'T DEMAND HIGH WINNING PCTS IF YOU WANT TO SURVIVE
There is a world of opportunities at the 50/50 level (or even the 30-40% winning pct level) which have much better survivorship odds than all the newbies I've seen who think winning 70%+ of the time is where they need to be. Because it's not so important to be right a lot of the time. It's more about how you bet when you ARE right. If the market catches you when you're wrong always holding the least amount of contracts (or shares) you intend to trade as a unit and YOU catch the market holding the larger amounts of contracts (or shares) when you're right, well then...bring it on...you can be wrong 7 out of 10 times and still make a living at this game! Obviously, I'm talking about adding to winning trades. Or, for scalping, you can think of it as starting small and increasing your scalp size as the 1st part of a trend or range has asserted that you're right.
ddav, good luck and I hope you make a bundle. Personally, I cringe when I see a mechanical system with high winning pcts. I know the other side of that probability coin when it comes to payoff ratios. The trading world can be your oyster at the 50/50 level. It is the road less traveled because, in general, humans hate having to take risk with those kinds of long-term odds at play (or less). But that emotion comes from the wrong part of the brain and should be ignored if one wants to succeed at this kind of game/living.
