Why Trading is so Hard

[themickey]

Win rates are way over rated by amateur traders. The more experienced/profitable traders focus on things within their control like identifying trades with high reward-to-risk and using good risk/trade mgmt, that is what wins the game.

I would much rather be a trader that can make a decent profit when they are in a prolonged low win rate period than a trader that has to have a high win rate to make any profit. One trader has a lot of upside when their win rate turns around, the other has a lot of downside.

Interesting!
Are you thinking mainly about intraday trading or does this include longer term?
My thoughts were you would be correct regarding going long & short intraday but this could be much more difficult for long term.
Your further comments on this, especially.... "that can make a decent profit when they are in a prolonged low win rate period?"...

 

[schweiz]

I would much rather be a trader that can make a decent profit when they are in a prolonged low win rate period than a trader that has to have a high win rate to make any profit. One trader has a lot of upside when their win rate turns around, the other has a lot of downside.

I prefer high winrates and huge profits. Then I have no downside at all.

There are several possible scenario's:

• high winrates and big profits
• high winrates and no profits
• low winrates and big profits
• low winrates and no profits

But for you there are apparently only two possibilities:

• high winrates and no profits
• low winrates and big profits

That kind of opinion we call biased.

High winrates are not related 1 on 1 with no profits.
Low winrates are not related 1 on 1 with big profits.

So stop that nonsense or tell at least all the possible outcomes.

I have high winrates for over 10 years and I make consistently profits. I have hard proof of that; it is called TRADING STATEMENTS.
I do have a low trading frequency as a daytrader, that matters too. I only take trades with high potential, average 2-3 times a day.

According to you that is impossible. Proof it to me.

If you have no clue about trading you take a lot of trades,most of them wrong, and you need a few lucky shots to survive. But according to you that's the real trader? No wonder that the majority never makes decent money.

The more experienced/profitable traders focus on things within their control like identifying trades with high reward-to-risk

This in contradiction with what you tell. Trades with high reward-to-risk are profitable trades in general. So if you are good in that your win rate will be high, not low.

 

[forexpreneur]

Win rates are way over rated by amateur traders. The more experienced/profitable traders focus on things within their control like identifying trades with high reward-to-risk and using good risk/trade mgmt, that is what wins the game.

Risk/trade mgmt is HIGHLY important. I've been lurking on the boards for a little while and I always cringe when I see posts that say something to the effect "Help before I blow up my account!", "Urgent! Should I get out of this trade", etc.

It's kind of like seeing a wreck on the freeway. You don't want to look but you can't help but look. So you read the post to hear that the person is down something insane like 25% in one trade or even worse. You just want to tell them "Yes. Get the hell out of the trade. Shut down your computer. And work on risk per trade; trade management; and your personal psychology!"

 

[schweiz]

Risk/trade mgmt is HIGHLY important. I've been lurking on the boards for a little while and I always cringe when I see posts that say something to the effect "Help before I blow up my account!", "Urgent! Should I get out of this trade", etc.

It's kind of like seeing a wreck on the freeway. You don't want to look but you can't help but look. So you read the post to hear that the person is down something insane like 25% in one trade or even worse. You just want to tell them "Yes. Get the hell out of the trade. Shut down your computer. And work on risk per trade; trade management; and your personal psychology!"

The problem is that an idiot who has some small money can be a "trader". No education or licence is needed, just open an account with some small money. No wonder so many lose.

 

[Handle123]

I changed eight years ago of my study of markets, instead of increasing win rate, I went to how to lose less and get drawdowns lower. For long term my win rate will never increase but my losing percentages have decreased and drawdowns decreased 65% by studying how to hedge. So effective hedging long term allows to beat the Indexes because I don't have to overcome deep drawdowns. Am getting much greater breakevens whereas before I had losses.

In scalping, I average down less levels so that my drawdowns are less, my stops are smaller due to deeper retracements, and using more S/R and trading 2/3ths less, so losing percentages went down. And thereby more size.

At some point, it becomes too difficult to increase winning percentages, all I can think then of trying to reduce losing which increases accounts. It much more calmer on nerves as well.

Good hunting all.

 

[comagnum]

This in contradiction with what you tell. Trades with high reward-to-risk are profitable trades in general. So if you are good in that your win rate will be high, not low.

I am talking about selecting trades with high reward-to-risk setups, that in no way implies they will have a high win rate.

No trader is going to have high win rates with 'huge profits' that is sustainable. And your statement about not having any down side is ridiculous, at best the down side can be minimized - not eliminated.

I believe that you believe you are one of the most winning traders on the planet, you sure go out of your way to remind us often. Compulsive gamblers can be masters at self deceit.

You views on trading are right on par with every other noob starting out, you can't expect them to see eye to eye as those more seasoned until they learn they go through their own hard won lessons.

 

[schweiz]

Let me amend what I said. Scalpers may have a high win rate although trade/risk mgmt has a far greater weighting in making the bottom line for traders in all time frames. Having no down side is a pie in the sky notion, at best you minimize your loses.

The “no downside at all” remark was cynical. No downside is theoretically possible if you have no losing trades, but I have never seen or heard about it.

A win rate of 90% and you still go bust if you are not aggressive in cutting loses. You see it all the time - those with 'high win rates' blowing up because they take small profits and let their losers run to far. The problem is traders that think they can always sustain a high win rate typically are on the road to ruin with their upside down reward-to-risk & high trading costs.

What you say is possible but not for 100% sure. Just the opposite of what you say is possible too, but also not for 100% sure. Reread what I marked in red. You confirm yourself that it is only possible if you are not aggressive in cutting losses. So cutting losses aggressively is the solution. You wrote it yourself. Your high trading costs are wrong too. I daytrade average 2-3 trades a day. And the trading cost is always less than 5% of the generated profits. Is that a high trading cost???

"I don't think you can consistently be a winning trader if you're banking on being right more than 50 percent of the time. You have to figure out how to make money being right only 20 to 30 percent of the time." Bill Lipschutz

Lipschutz was a forex trader. Forex is different from futures and from stocks. His opinion is only based on forex experience. On top of that he was trading decades ago, things have changed a lot since he was trading forex at Salomon Brothers.

To show how relative that quote is (I have many more of these):

• "There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will." — Albert Einstein, 1932
• "I think there is a world market for maybe five computers." — Thomas Watson, chairman of IBM, 1943
• "Everyone acquainted with the subject will recognize it as a conspicuous failure." — Henry Morton, president of the Stevens Institute of Technology, on Edison's light bulb, 1880
• "The horse is here to stay but the automobile is only a novelty—a fad." — The president of the Michigan Savings Bank advising Henry Ford's lawyer not to invest in the Ford Motor Co., 1903
• "There is no reason for any individual to have a computer in his home." — Ken Olson, president, chairman and founder of Digital Equipment Corporation (DEC)
• "The world potential market for copying machines is 5000 at most.” — IBM, to the eventual founders of Xerox, saying the photocopier had no market large enough to justify production, 1959
• A rocket will never be able to leave the Earth’s atmosphere.” — New York Times, 1936
• “Remote shopping, while entirely feasible, will flop.” — Time magazine, 1966.
• “There’s no chance that the iPhone is going to get any significant market share. No chance.” — Microsoft CEO Steve Ballmer, 2007.

 

[schweiz]

I am talking about selecting trades with high reward-to-risk setups, that in no way implies they will have a high win rate.

No trader is going to have high win rates with 'huge profits' that is sustainable. And your statement about not having any down side is ridiculous, at best the down side can be minimized - not eliminated.

I believe that you believe you are one of the most winning traders on the planet, you sure go out of your way to remind us often. Compulsive gamblers can be masters at self deceit.

You views on trading are right on par with every other noob starting out, you can't expect them to see eye to eye as those more seasoned until they learn they go through their own hard won lessons.

I started daytrading in the mid 90's before the internet existed and orders went by phone. And I still "survive". So your prediction about my total wipe out is till today still wrong, that's roughly 20-25 years that we are waiting for your prediction to fulfill.

I should ask my brokers if they send me fake statements with profits that I did not make...
But where does the money come from then that I withdraw regularly? Santa Claus?

There are several people on ET that can confirm that I am not the losing noob you pretend I am. But as I want to keep my contacts from ET private, nobody should respond to this.

Discussion closed.

 

[themickey]

The only method I am aware of for high win rates is a combination of holding for long periods and martingale.
https://www.investopedia.com/articles/forex/06/martingale.asp

 

[schweiz]

The only method I am aware of for high win rates is a combination of holding for long periods and martingale.
https://www.investopedia.com/articles/forex/06/martingale.asp

Well then it is time to start studying and out-of-the-box experimenting. There is still a lot of room for improvement.

I would suggest not to try Martingale. Unless you wish to wipe out your account.

I know somebody who had deep pockets and tried it in Forex. He lost 10 million$. He HAD deep pockets, now he has a hole in his pockets.

A second one tried it on futures S&P. But the big contracts at 250$ a point, as the Emini did not exist yet at that time. Each margin call he doubled his position till he had a few hundred contracts and run out of money to increase again his position. The bank closed his account and he lost an 8 digit amount of dollars. He started when the S&P was around 495 in 1995 and went short...