Assistance building my own trading system

Hi All,

a relative newbie to FOREX, but I'm currently building my trading system looking at various indicators and then backtesting.

In terms of a succesful system, what would constitute a good return. I accept this is somewhat of a stupid question. But, - should I be looking at a winning trades %, or PIP gains ?

Is 70% winning trades good ?

Regards
Phil

PhilC5871 said:

Hi All,

a relative newbie to FOREX, but I'm currently building my trading system looking at various indicators and then backtesting.

In terms of a succesful system, what would constitute a good return. I accept this is somewhat of a stupid question. But, - should I be looking at a winning trades %, or PIP gains ?

Is 70% winning trades good ?

Regards
Phil

Click to expand...

IMO I would spend some time educating yourself about what makes a system successful before you simply dive in.

Sorry to be harsh but your question "Is 70% winning trades good" shows a real lack of understanding.

70% winning trades, while still having enough trades (and not for example a daytrade system making a small trade every half year) is definitely good. But whether it is good enough depends on:
* Trade frequency
* average win / average loss (no sense to win 70% o the time when your average loss is twice your average profit) etc.

In general, you do not look for % winning first, but for ROI (i.e. average gain PER TRADE, minus costs per trade and slippage).

A high percentage winning trades helps you with this, as you have less loss trades to "win against". Also, statistically, a higher percentage winning trades means less periods of consecutive losses, so lower overall drawdown.

But at the end, I do not deploy a system to count the wins (only), but to make money. Which means you are primarily interested in general win per trade, plus trade frequency, plus max drawdown, so you can calcualate a return on capital.

i would recommend van tharps PEAK PERFORMANCE books, and along with his DEVELOPING A TRADING SYSTEM THAT FITS YOU.

Before creating a system have a look at a random equity curve generator and look at the relationship between all the factors and how various win loss ratios and risk reward effect the overall performance of ur system you can then see if 70% is good.

For me Im more interest in having a good risk reward ratio than a good risk reward, but that is personal preferance. If a high win rate is better for u then go for that. It all depends on if u can take having lots of small losses with a big winner.

http://www.hquotes.com/tradehard/simulator.html

why not first use a trading strategy that you found online as is. I.e. no changes what so ever. If you can do that successfully you will acquire a more thorough understanding of a strategy. I don't think newbies should be adjusting strategies themselves since they wont have the requisite experience to continue believing in the profitability of the strategy after a streak of 6 or 7 losing/scratch trades (maby that was just me though). best of luck