You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Winning percentage
- Thread starter Sucker
- Start date
The more important ratio is winning dollars vs. losing dollars rather than just winners vs. losers.
You can have an under 50% win/loss ratio and still regularly make money - it depends on your position management and whether your winning entries produce significantly more profit than your losing entries.
You can have an under 50% win/loss ratio and still regularly make money - it depends on your position management and whether your winning entries produce significantly more profit than your losing entries.
Quote from ArchAngel:
The more important ratio is winning dollars vs. losing dollars rather than just winners vs. losers.
You can have an under 50% win/loss ratio and still regularly make money - it depends on your position management and whether your winning entries produce significantly more profit than your losing entries.
Yea, I think that's the concept a lot of these guys are missing.
They think they need to be right 90% of the time to make money.
That's why I always tell them to strive for a 3 to 1
profit/loss ratio. Hell, you can have a 35% success rate and
still make a bucket load.
the obsession with winning percentage is the best indication that the trader is a newbie or a small time speculator. Big timers and just the average guy that is experienced, know that winning percentage all by itself doesn't mean diddly squat.
Its all about EXPECTATION. That word has a specific meaning in relation to trading, look it up if you don't know what I am talking about, it is the core concept of trading.
Its all about EXPECTATION. That word has a specific meaning in relation to trading, look it up if you don't know what I am talking about, it is the core concept of trading.
There are great points made here but I'd like to add a point that I don't think has been made yet.
Regarding win/lose% and win$/lose$ combinations,there is no doubt that the former is meaningless without knowing the results of the latter and vice versa. However I have noticed in my trading results that the win/lose $ results form a distribution pattern that does not lend itself to typical mean/variance analysis, i.e "averages" are very misleading with this part of the equation. Let me explain.
I document every single trade I do for post- closing review (and self-loathing!). I have found my win/lose% to be quite stable over time, falling in the 60% area quite consistently. My win/lose $ are another story. I never (of course execution screw ups aside) let any single losing trade be "big" because of the use of mental stops. Therefore my losers follow a fairly tight pattern around an average loss number. My winners are very different. With my winners, I find that I get mostly small gains, say 80-90% of the time (that is, 80-90% of my winning trades) and the remaining wins are the big ones, i.e. 2-3x my losing dollars. So my results follow a pattern of all losers frequency about equal to or slightly exceeding my small winners frequency and loser $ about equal to or slightly exceeding my wining $. My relatively fewer "big" wins are the ones that pay the rent. Right now I'm trading super small to establish this pattern and improve it.
Regarding win/lose% and win$/lose$ combinations,there is no doubt that the former is meaningless without knowing the results of the latter and vice versa. However I have noticed in my trading results that the win/lose $ results form a distribution pattern that does not lend itself to typical mean/variance analysis, i.e "averages" are very misleading with this part of the equation. Let me explain.
I document every single trade I do for post- closing review (and self-loathing!). I have found my win/lose% to be quite stable over time, falling in the 60% area quite consistently. My win/lose $ are another story. I never (of course execution screw ups aside) let any single losing trade be "big" because of the use of mental stops. Therefore my losers follow a fairly tight pattern around an average loss number. My winners are very different. With my winners, I find that I get mostly small gains, say 80-90% of the time (that is, 80-90% of my winning trades) and the remaining wins are the big ones, i.e. 2-3x my losing dollars. So my results follow a pattern of all losers frequency about equal to or slightly exceeding my small winners frequency and loser $ about equal to or slightly exceeding my wining $. My relatively fewer "big" wins are the ones that pay the rent. Right now I'm trading super small to establish this pattern and improve it.
fkeane, are those "small wins" still larger than your "small losses"? just curious.
mondotrader, i wouldn't be too quick to assign rookie status to anyone who trades for percent accuracy. obviously the number that counts is expectation, but to say that anyone who achieves, or strives to achieve, their expectation with percent accuracy must be a rookie is just not true at all.
mondotrader, i wouldn't be too quick to assign rookie status to anyone who trades for percent accuracy. obviously the number that counts is expectation, but to say that anyone who achieves, or strives to achieve, their expectation with percent accuracy must be a rookie is just not true at all.
Quote from fkeane:
I document every single trade I do for post- closing review (and self-loathing!). I have found my win/lose% to be quite stable over time, falling in the 60% area quite consistently. My win/lose $ are another story. I never (of course execution screw ups aside) let any single losing trade be "big" because of the use of mental stops. Therefore my losers follow a fairly tight pattern around an average loss number. My winners are very different. With my winners, I find that I get mostly small gains, say 80-90% of the time (that is, 80-90% of my winning trades) and the remaining wins are the big ones, i.e. 2-3x my losing dollars. So my results follow a pattern of all losers frequency about equal to or slightly exceeding my small winners frequency and loser $ about equal to or slightly exceeding my wining $. My relatively fewer "big" wins are the ones that pay the rent. Right now I'm trading super small to establish this pattern and improve it.
This is a very common pattern in some type of systems. Breakout systems may be an exception here because they aim at big targets and either get there or not. At least I do not see this type of pattern in my systems that are breakout systems, but my statistics are not that extensive, so I may be wrong. So far, 3 months or so, mostly winners and big ones on top of that.
Of course my losers are also close to some average number, because I always cut them at the same stop-loss which is 6 ES pts. In fact, I rarely have any other losers than those stopped-out.
Quote from ArchAngel:
The more important ratio is winning dollars vs. losing dollars rather than just winners vs. losers.
You can have an under 50% win/loss ratio and still regularly make money - it depends on your position management and whether your winning entries produce significantly more profit than your losing entries.
Both are important, you just need to find the right balance, some want bigger ratio of winners to losers others want a bigger ratio of reward to risk. However, you need to treat both of these things together to have a system of positive expectancy which is the only thing that determines whether your system is profitable or not.
The whole discussion of this issue is pretty much pointless, as one thing is not more important than the other, both should be treated on an equal footing. You may prefer to have one thing more relevant than the other, but you should not forget that if the other thing is too small, you will not make money.
For instance, two of my systems are designed to have the reward to risk ratio of 1.5 and if they get a decent ratio of winners to losers (50% is already enough) they make money. And they do, with the winners outnumbering the losers.
Depends on atr.
high atr=wide stops, small profits=high hitrate=good money
low atr=tight stops, big profits=low hitrate=very good money
high atr=tight stops=zero hitrate=no money
high atr=wide stops, small profits=high hitrate=good money
low atr=tight stops, big profits=low hitrate=very good money
high atr=tight stops=zero hitrate=no money