What do you think matters most in trading?

[ironchef]

That's exactly my experience after more than 25 years trading.
The post below confirms what you say. The questions that are asked have no relevance with the way I trade.



@themickey
I think you think like the classical way of trading. But there are other approaches possible.
For me trading is not gambling at all. I see it probably like @fullautotrading .
My answer to your questions would be:

• I can never determine the exact outcome (because the market is dynamical).
• I can also not say the exact price when I sell.

But that's not important and not a proof of gambling.
What I know is:

• I get my signals not from price but from timing. So if I get a signal, I should buy/sell at market price, no matter what the price is. So I don't care about the price.
• Same for closing the trade. Timing is important, not price. Price will automatically be good if timing is good.
  
• I know with very high probability that I will always enter at a very good price and exit at a very good price.
• I also know that I will have a very high rate of winning trades.
• I also know that my average profit per winning trade is many times bigger than the average loss per losing trade. So very positive expectancy.
• My winning rate and profits are so far away from what normally the "gambling statistics" would be, that it is very clear and visible that it is not gambling.

Constant winning rates above 80-90% are not rates you can get with gambling. And profits that are a manifold of the losses neither.

Excellent post.

I have one question: Are you aware of any successful traders with a method that generates << 50% win rate but with positive expectancy overall?

Thank you.

 

[ph1l]

I have one question: Are you aware of any successful traders with a method that generates << 50% win rate but with positive expectancy overall?

Curtis Faith was a successful trend follower with a low win rate.
https://www.quantifiedstrategies.com/trend-following-strategy/

 

[deaddog]

Excellent post.

I have one question: Are you aware of any successful traders with a method that generates << 50% win rate but with positive expectancy overall?

Thank you.

I think you will find a lot of successful traders who focus more on R/R than win rate.

I can't find any numbers but O'Neil deciples are not concerned about win rate.

Cut your losses. Make your winners count.

 

[SunTrader]

I think you will find a lot of successful traders who focus more on R/R than win rate.

I can't find any numbers but O'Neil deciples are not concerned about win rate.

Cut your losses. Make your winners count.

Sorry but IMO successful traders don't follow silly r/r's.

Plans including where to enter, where to put stop exit if reason for entry is no longer valid and profit stop based on price action of some sort. Targets are wishful thinking, never knowing in advance what the right hand side of the chart will do.

Meanwhile the other part of R/R; risk, is of an event happening. Not trade equity/margin deployed.

 

[deaddog]

Sorry but IMO successful traders don't follow silly r/r's.

Plans including where to enter, where to put stop exit if reason for entry is no longer valid and profit stop based on price action of some sort. Targets are wishful thinking, never knowing in advance what the right hand side of the chart will do.

Meanwhile the other part of R/R; risk, is of an event happening. Not trade equity/margin deployed.

I didn't say they follow them I said they focus on them.

I agree that you don't know where you will exit and because of that you follow whatever strategy you have. I didn't mean to imply that you set a target at some multiple of your risk, I meant that you want your winners to be greater than your losers.

The stats I keep will tell me my winning percentage but it means nothing without knowing the size of the winners and losers.

I like to consider myself a successful trader. I don't think I've ever had a greater than 50% win rate. My average win is usually 4 to 5 times my average loss.

 

[hilmy83]

If I get to 10MM then it will be because I scaled up using the same strategy that got me this far.
So far it has worked. No margin, limited risk, no stress and I manage to fund my lifestyle and grow my liquid net worth.

Can I ask what's your CAGR?

 

[deaddog]

Can I ask what's your CAGR?

It's difficult for me to give an accurate number because I fund my lifestyle expences out of my portfolio and they vary from year to year.
Just taking growth of my liquid net worth is around 7% for the last 20 yrs

 

[ironchef]

Curtis Faith was a successful trend follower with a low win rate.
https://www.quantifiedstrategies.com/trend-following-strategy/
View attachment 320504
View attachment 320505

Thanks.

 

[virtusa]

Excellent post.

I have one question: Are you aware of any successful traders with a method that generates << 50% win rate but with positive expectancy overall?

Thank you.

Yes, John Henry was like that and several Turtles too. But these people were trading long time ago. I have the impression that markets were different at that time. Or maybe I changed my style of trading over the years...
For me profitability was always linked with a high winning rate. Especially in daytrading.
I am not aming at high win rates. I just want to take all the waves and cut all my losses. That automatically results in high winning rates.

 

[virtusa]

I think you will find a lot of successful traders who focus more on R/R than win rate.

I can't find any numbers but O'Neil deciples are not concerned about win rate.

Cut your losses. Make your winners count.

You can have both. I initally did not want to lose money, so I tried to improve my entries. As my entries became better and better, R/R as well as winrate became better. One does not exclude the other.
If they focus on R/R and not on winrate, it means they have problems to limit the number of attempt to the only real good entries. They have to try many times to catch the right entry. They have maybe 30% good entries, while I have over 80%. Good entries are hugely important in trading.



But oh so difficult to achieve consistently...