Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I am trading only on demo, and I am not yet fit to trade any other way, and I have no money to trade with either, but what you said above is also my own finding, from my research, testing and practice.
Of which I do a lot. I mean really, really a lot, because I am also underemployed and have time.
Anything approaching a win rate of that order is now instinctively very off-putting to me anyway, and I would not have confidence in it.
I see the theory advantages of high win-rates, of course, but I think that in reality the very high risk to reward factor is likely to be an account killer, simply because if you trade for long enough, even with a win-rate of 90% or more, you are eventually going to hit (or "eventually going to be hit by") five or six losers all rather close together - even I will not say "consecutively" - and that is going to be a disaster unless you use such a small position size that the win amounts, given the relationship between risk and reward, are going to be too small to interest even someone like me who has no money in the first place. (Very long sentence, sorry, I understood it anyway, maybe others did not read it until the end!?).
At the moment, I am trying, specifically, to find a way of combining a win-rate higher than 50%, even if it is only a little higher than 50%, with a reward-to-risk bigger than 1.0, even if it is only a little higher than 1.0.
It seems to me that if one can find a reliable and sensible way of doing this combination, then it ought to be possible to trade regularly with a small position size but still gradually make some profits worth having, maybe by eventual compounding, given a high enough trade frequency.
I think trade frequency is also a pretty relevant part of the "equation" in that there is not much value in a method which trades too rarely, anyway.
For example, if I could find a way of steadily trading the S&P with, for example, a 6-point stop loss and a 7.5-point target, and a win rate of just 50% or anything higher%, and if many trading opportunities are available for such a method, I will be very happy.
(Well, many people will be very happy with this, if it is reliable and robust enough, I expect?)
I am not there yet. Of course. But it does seem to me that this is a much more reasonable and realistic thing to be in search of, than something with either a win-rate of 90% or more, or a very high reward-to-risk return when it wins much less often than 50%.
That is currently my approach, anyway. As someone with very little experience but some mathematical understanding. It is what I look for.
