Which trading strategy would you prefer?

[fd1]

Suppose you have 2 trading strategies which give you a positive edge today to make money. One day eventually, they will lose their edge but you don't know when.

Strategy 1
----------
Slightly above 50% win-rate. When you win, you win 1R. When you lose, you lose 1R, unless some accident happens or the security makes a huge unexpected gap.

Strategy 2
----------
Win-rate is way below 50%. You lose most of the time. However, when you win, you win 2R. When you lose, you lose 1R.

Which strategy would you prefer, assuming that that the returns in dollar terms is about the same?

I would like to ask the experienced traders here with practical experience. Which strategy would you prefer and why?

 

[malaguti]

i would have chosen neither and looked for a better strategy which gave a better R and better win rate, which should have been an option. I certainly wouldn't settle for either.
sightly above 50% with a 1:1 will get you nowhere in the long run
and way below 50% with 2:1 may or may not give you any long term success but will ultimately cause you to give up on the strategy anyway. few people even with patience will likely not sit through 10 losing trades for example and cause them to abandon the meagre strategy anyway. In my experience only something with a relatively high hit rate is going to give me the confidence to sit through a bad spell

 

[Likhazar]

One day eventually, they will lose their edge but you don't know when.

This sentence shows this is not worth the effort. Find strategy which is basing on basic markets rules. Strategies based on market inefficency may stop working nextday.

Also both strategies from examples are not acceptable.
Strategy 1
Remember that when you are losing you are not losing 1R, but 1R + commissions + slippage.

Strategy 2
Winrate way below 50% and RR 2:1, no no no. Your account may not handle series of losses.

 

[tomorton]

This sentence shows this is not worth the effort. Find strategy which is basing on basic markets rules. Strategies based on market inefficency may stop working nextday.......

This is the heart of the issue. Don't use a strategy that is bound to fail. Use a strategy that, at worst, becomes inapplicable for temporary periods due to rotating market conditions, at the end of which you simply resume trading.

 

[Signalcalc]

Neither, strategies with a high win rate 65-70%+ are easier to trade than 50%, once you realise the 50% strategies are losing their edge then your account will have already taken a substantial hit.

 

[alexwinkler]

50% winning strategy isn't too hot. I'd have to agree with @Signalcalc

My favorite pattern is the Support Line Bounce which I'm profitable with 73.68% of time time based on 57 trades this year. I added a little video of a recent trade with this pattern

Quick Live Trade: LTC Support Line Bounce (Long)

 

[fibo_trader]

i would have chosen neither and looked for a better strategy which gave a better R and better win rate, which should have been an option. I certainly wouldn't settle for either.
sightly above 50% with a 1:1 will get you nowhere in the long run
and way below 50% with 2:1 may or may not give you any long term success but will ultimately cause you to give up on the strategy anyway. few people even with patience will likely not sit through 10 losing trades for example and cause them to abandon the meagre strategy anyway. In my experience only something with a relatively high hit rate is going to give me the confidence to sit through a bad spell

Love you brother malagutti. Outstanding answer. Your Honor, give this man a seegar.

I personally strive for 10 +ve out of 10 trades. that is my ideal standard. If I drop down to 80% I am concerned, at 70% I am very concerned. High percentage losing trades delivers terrific blows to the stomach on the regular basis. In some cases to the Head. Look what happened to Mohammed Ali. George Foreman shortened Ali's mental life by 70% in just one fight - see below. Terrible way to live. Cheers to malagutti

 

[cantagril]

Like the Old Pilots have already said: Neither....and if that's the choice, then don't start trading. To my mind, making money consistently is mainly about good management....but if you're using an inherently unmanageable strategy the you're kind of fucked before you start.

 

[NVP]

Suppose you have 2 trading strategies which give you a positive edge today to make money. One day eventually, they will lose their edge but you don't know when.

Strategy 1
----------
Slightly above 50% win-rate. When you win, you win 1R. When you lose, you lose 1R, unless some accident happens or the security makes a huge unexpected gap.

Strategy 2
----------
Win-rate is way below 50%. You lose most of the time. However, when you win, you win 2R. When you lose, you lose 1R.

Which strategy would you prefer, assuming that that the returns in dollar terms is about the same?

I would like to ask the experienced traders here with practical experience. Which strategy would you prefer and why?

i prefer a high Win rate and a 2R minimum return each time ......otherwise why am i here trading ?

 

[landorra]

Both options can be good if you know what you are doing. Maybe i would have chosen a strategy with a better R and better win rate too. Said that:
1. I agree that sightly above 50% with a 1:1 will get you nowhere in the long run
2. I also agree that being below 50% with 2:1 will ultimately cause you to give up on the strategy anyway.
Personally I would not try the second before having tried the first. That is my ideal standard. Any percentage under 70% makes me very concerned too. And it's true that high percentage losing trades delivers terrific blows to the stomach on the regular basis. I luke that image although I don't like boxing.

 

[ffsear]

Both strategys have a negative EV so neither.

 

[fibo_trader]

Suppose you have 2 trading strategies which give you a positive edge today to make money. One day eventually, they will lose their edge but you don't know when.

A successful Trend Rider/Surfer NEVER loses his EDGE. Never. Same as the Lion, tiger, cheetah, leopard. Drawback is drawdowns for the former and death from old age and/or territorial skirmishes for the latter. Drawdowns have been eliminated by Fibo, completely eliminated - the drawdown shown on Page 1 of my thread in signature below being the one and only, the worst and I survived it and came out OK. EDGE is even better now.