Let's talk about winning percentages. Most traders shoot for a high winning percentage, but some of the best traders don't even have a 40% winning average.
Look at the chart below shows how a 33% winning trader makes more money than a 55% trader.
Most traders want to win 80% or 90% on all their trades, but that's not real and it doesn't even matter. Here's why:
It's not whether you're right or wrong on your trades, but how much money you make when you're right versus how much you lose when you wrong.
Here is a great article that explains the reality of the markets and how they work (click link below)
Most vendors will not share this information with you because they know it's not what you want to hear.
If you have a
set of trading rules that produces a positive expectancy (meaning it wins over time) why do you care if you're making more money on fewer winners?
It's your EGO that makes this business very difficult. You are more worried about being right than you are about making money.
If the market is going sideways or not trending 66% of the time that should tell you 80% or 90% winners is
fantacy.
About 33% of your trades will be Break-even and, 33% will be stop-outs. On average, you will have 33% winners. You will not accept this until the market beats the hell out of your account for trying to be right 80 to 90% of the time. In the 35 years, I've seen more traders blow out of the business because they couldn't accept these truths.
I get it, it's human nature to want to win on the majority of
your trades, but you're just not going to see that in trading.
You have to cut your losses short and let you winners run.
