win/loss ratio

[regento]

What s ur average win loss ratio and how to improve it ?


i m 2:1 with 55 % winning trades and would like to get it better, seems i m taking profits too early on good trades. I m very good at cuting losses, but need advice to let benefits run longer. ( only stocks)


Cheers

 

[intradaybill]

Quote from regento:

What s ur average win loss ratio and how to improve it ?


i m 2:1 with 55 % winning trades and would like to get it better, seems i m taking profits too early on good trades. I m very good at cuting losses, but need advice to let benefits run longer. ( only stocks)


Cheers

Very important question. I have systems with average W/L close to 2, most of my systems are around 1 and few more systems with a ratio about 0.5. It all depends on the win rate. If your method has good timing you can pocket profits sooner and avoid the risk of the trade turning a loser.

I have a trend following system with avg. W/L close to 7. It loses 7 times of 10 but still makes about double what it loses. I trade very little money with it because of this low win rate, just a psychological thing you know.

With your win rate and avg. W/L your profit factor should be around 2.5. I think it is difficult to go higher than that.

Here is a good paper that discusses relations of win rate, profit factor, etc.

 

[regento]

which indicator does your trend sysems use,

i m using trend following too, and after many years testing multiple combinations, i use the most simple one: long break channel 19,exit break channel 9 and initiating the position only on discretionary basis a lot of times.

 

[nLepwa]

Quote from regento:

What s ur average win loss ratio and how to improve it ?


i m 2:1 with 55 % winning trades and would like to get it better, seems i m taking profits too early on good trades. I m very good at cuting losses, but need advice to let benefits run longer. ( only stocks)


Cheers

Win/loss ratio is related to %of winning trades. You should rather look at the profit factor as it accounts for that.

Profit factor and trade frequency are the (only) two factors that influence your equity curve. You can indeed work on improving the profit factor but in most cases it's easier to increase the trade frequency.

Ninna

 

[regento]

Quote from nLepwa:

Win/loss ratio is related to %of winning trades. You should rather look at the profit factor as it accounts for that.

Profit factor and trade frequency are the (only) two factors that influence your equity curve. You can indeed work on improving the profit factor but in most cases it's easier to increase the trade frequency.

Ninna

yep, very good analysis, only thing is that working solo and with limited robots, i can t do much more alone, need to find a team but not easy and i dont wanna fall into high frequency either

thanks

 

[dwpeters]

Interesting discussion. It can be a balancing act between taking enough trades, and taking the best trades. I tried a variation of a strategy to get more trades but the trades weren't as good and so it felt too much like churning my account. I trade several strategies with hold times from a few days to a few weeks. My win% ranges from 60 to 70% and my Avg Win/Avg Loss ranges from 1 to about 1.5, with profit factors ranging from 1.4 to 2.3.

 

[d08]

Quote from nLepwa:

Win/loss ratio is related to %of winning trades. You should rather look at the profit factor as it accounts for that.

Profit factor and trade frequency are the (only) two factors that influence your equity curve. You can indeed work on improving the profit factor but in most cases it's easier to increase the trade frequency.

Ninna

+1, win rate doesn't matter at all given that you have a big enough sample. I started with thinking win rate has some importance but now I just focus on the Profit factor and trade frequency to get a large number of trades and therefore a smooth equity curve.