Why only 66% approximately?

This is a discussion on Why only 66% approximately? within the General Trading Chat forums, part of the Reception category; I keep hearing about traders acheieving only around 60-70% success rate with their trading. Why is this the case ? ...

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Old Jun 5, 2011, 10:48pm   #1
Joined Apr 2011
Why only 66% approximately?

I keep hearing about traders acheieving only around 60-70% success rate with their trading. Why is this the case ? What are the factors that one should be looking out for to increase these odds?

Can they be improved upon?

It would be great to hear from traders who have overcome these kind of problems.
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Old Jun 5, 2011, 10:59pm   #2
Joined Jul 2008
It's different for everyone. I would expect there was a band where the majority of us reside. I would like to know for interest sake who is the top retail trader in the world and his/her win rate
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Old Jun 6, 2011, 1:36am   #3
Joined Nov 2008
Re: Why only 66% approximately?

To be honest, I am within that range too. That said, a good trader told me that my method isn't good or I am not using it good enhough, he told me a good strategy has around 80% of winning trades...

What to think about it, i don't know...

On the other side I have a good r/r ratio so who cares...

It's all about making a lot of money...so should you worry for not having a 80% winning rate???

I think that as long your r/r is so high that you can have a winning ratio to drop by 10% and you still make profits you don't have to worry, but when you can't afford to let your winning ratio to drop even 1% you really need to look for improvements in your strategy or your emotions!
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Old Jun 6, 2011, 7:37am   #4
Joined Jul 2003
Re: Why only 66% approximately?

You're focussing on just one element of trading performance which in isolation is quite meaningless.

Without taking into account average win and average loss (and drawdown if you want to get real fancy and impress the neighbours) it tells you nothing.

I’d trade (quite happily) a system with a 10% win rate. (I wouldn’t actually for all sorts of other reasons, but that doesn’t detract from trading a 10% win rate system which turns a useful profit).
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Thanks! The following members like this post: trader_dante
Old Jun 6, 2011, 7:55am   #5
Joined Jan 2008
Re: Why only 66% approximately?

Win rate is a meaningless number. You should be looking at the profit factor. It tells the whole story. You can be 90% right and lose money. Here is a paper that derives how win rate and profit factor are related: http://www.priceactionlab.com/Litera...fitability.pdf

By the way, one of the filters hedge funds use for hiring managers is profit factor. They do not even look at win rate. Profit factor should be > 3, at minimum, I'm talking real performance here.
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Old Jun 6, 2011, 8:10am   #6
Joined Jul 2003
Re: Why only 66% approximately?

...or even just (pW * aW) - ((1-pW) * aL) being positive.
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Old Jun 6, 2011, 8:19am   #7
Joined Jan 2011
Re: Why only 66% approximately?

(my contribution to the string of useless numbers)

% edge == 100% - [(E(X) + $L) / $L]
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Old Jun 6, 2011, 11:10am   #8
Joined Jan 2008
Re: Why only 66% approximately?

Quote:
Originally Posted by TheBramble View Post
...or even just (pW * aW) - ((1-pW) * aL) being positive.
This equation is equivalent to saying that the profit factor is >1. Regardless, this equation is very hard to understand its result. Profit factor is easy to understand. I mean that (pW * aW) - ((1-pW) * aL) can be so small that it doesn't make sense to trade.
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Old Jun 6, 2011, 11:12am   #9
Joined Jan 2008
Re: Why only 66% approximately?

Quote:
Originally Posted by DashRiprock View Post
(my contribution to the string of useless numbers)

% edge == 100% - [(E(X) + $L) / $L]
Truly meaningless
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Old Jun 6, 2011, 11:36am   #10
Joined Jul 2003
Re: Why only 66% approximately?

Quote:
Originally Posted by intradaybill View Post
This equation is equivalent to saying that the profit factor is >1. Regardless, this equation is very hard to understand its result. Profit factor is easy to understand. I mean that (pW * aW) - ((1-pW) * aL) can be so small that it doesn't make sense to trade.
The benefit is that you don't have to wade through 8 pages of pdf and as interesting as it was, the majority on here (shot in the dark?) would be happy to have a system with positive expectancy let lone something that a hedgie would be interested in hiring them in for.
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Old Jun 6, 2011, 11:45am   #11
Joined Jun 2011
Re: Why only 66% approximately?

The word hedgetables comes to mind for some reason.
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Old Jun 6, 2011, 12:14pm   #12
Joined Jul 2003
Re: Why only 66% approximately?

Then stop looking in the mirror.
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Old Jun 6, 2011, 12:58pm   #13
Joined Feb 2002
Re: Why only 66% approximately?

Win rate is a false objective unless you take risk:reward into account as well. Generally, as WR falls, r:r needs to increase. So, a very low WR is compensated for by a high r:r, winning trades paying much higher net gains than losing trades cost in net losses. WR is part of a ratio, not a target in itself.
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Old Jun 7, 2011, 7:32am   #14
Joined Jan 2008
Re: Why only 66% approximately?

Quote:
Originally Posted by TheBramble View Post
The benefit is that you don't have to wade through 8 pages of pdf and as interesting as it was, the majority on here (shot in the dark?) would be happy to have a system with positive expectancy let lone something that a hedgie would be interested in hiring them in for.
You may think so but again you may be flat wrong.

In two lines of algebra I can prove to you that the meaningless expectancy > 0 statement is equivalent to the meaningful statement that the profit factor is > 1.
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Old Jun 7, 2011, 7:57am   #15
Joined Jul 2003
Re: Why only 66% approximately?

Quote:
Originally Posted by intradaybill View Post
You may think so but again you may be flat wrong.

In two lines of algebra I can prove to you that the meaningless expectancy > 0 statement is equivalent to the meaningful statement that the profit factor is > 1.
You go right ahead and amuse yourself with some algebra then. It means nothing in the real world and has no practical value.

All you need to know about any system as a retail player is: Is it making a profit?

As a pro player I appreciate there are all sorts of KPI that apply as they do in all forms of corporate servitude, but that's a whole different ball game and it's typically all smoke and mirrors.
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