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You might want to check out both books by Bob Volman, if you‘re interested in discretionary way. For automated way, check e.g. Kevin J Davey or Andrea Unger, lot of stuff available for free. This way or other way, the skill of consistently beating the random walk probabilities is not easy to acquire.
It is a really old thread, but the question comes up all the time.
It's not your win rate itself that matters, it's how much you make over time. Suppose you do 10 trades, and 4 are profitable and 6 are not. Not a good-seeming win rate, but you also need to know how big the profits were vs. how big the losses were. If the losses were from trades that you killed after a few ticks, but you held the profits for larger moves, where you stand may be pretty good.
You need the profit factor, or the expectancy, or just the average P/L per trade to know whether a given win rate is good or bad.
So it's a good question, because it brings to light the fallacy of just looking at the win percentage, as if all trades were always the same. They're not.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
I've been shown statements from a few people that had equal risk reward and around 70% winrate. I have no clue how they were doing it though. Such trades just seem to be harder to find.
win rate is a terrible measure of profitability or the magnitude of the profit.
if I am not batting plus 80 % then i am losing to fees and slippage.
I hve found over and over again that the absolute best measure your strategies success and your trading success is
net contracts or net shares gaines or lost
example.
i did 5000 shares. i net out 1000 dollars
1000/ 5000 = 20 cents per share. this allows me to start to understand slippge etc once i scale up
if trading futures at the end of the day you would say net profit is
100 dollars. my total micro contracts traded round turn was 50
100 dollars/ 50 contracts = net profit of 2 dollars a contract. this is exactly why hft makes 2 cents 5 cents 1 cent on all trades they averae all of the net gains divided by total
shares or contracts traded in order to understand and see what is going on with their trading.
I am personally averaging today in the futures mkts
140 dollars per futures contract traded which is highly unusual for me. this is an extremely high number for me or anyone.
yesterday was completely different
here is yesterdays 94 dollars per contract traded.
My most successful friend who trades massive contracts a day over 3000 per day averages around 2 bucks a contract per day.
he is a hig frequency human trader with an algo assist.
he views my trading as skill mixed with luck mixed with trend following and proper cutting of losses but I am patient and dotn have that many
I would post a picture of my win loss today and yesterday if i could understand how to do it?
have a great day
my win loss yesterrday was long trade 71 % per cotnract and 90 % per trade
my short was 43% per contract and 81 % per trade
today my long per ocntracts win is 84 % per contract and 100 % per flat to flat
today my short w/l is 75 % per contract and 100 % per flat to flat.
yesterday i did 30 total flat to flat trades
today i have done 8 flat to flat trades.
FYI once you get to this point you can then start to run stats on ho wmuch of the daily range you are capturing in order to see just how advantageous day trading is for you after fees and slippage versus just a buy and hold strat.
Today in the NQ I am 7 points or 28 ticks of profit per lot on average.
MY buddy who trades prop at the end of the day always averges less than 1 tick in the nq! and if this number is way different from one day to the next then he knows something is wrong with his system or somethign is going on in the mkt. He is that consistent.
As per my experience Win rate , R/R is all depends with the trader. some traders can trade poor R/R but still come out as consistantly profitable traders. There is no clear cut rules. You need screen time . stick to a good method and build the screen time.
I always go for a reward that is at least the size of my risk for less win rate, I want a reward that is at least twice as large as my risk and in pretty much no case should traders be taking trades where the risk is greater than the reward because then you have to be right 80% or 90% of the time. That’s very difficult to do, even for a very experienced trader.
Or more correctly " you could have a system that has a 70% win rate, but really, the outcome of each trade is uncertain"
I hear this 50/50 idea bandied about..it is silly - it is just code for 'uncertain'. If you knew it was statistically 50 50 then your long term win rate would be 50, not 70.