Why only 66% approximately?

Billy Gates

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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.
 
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
 
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...:clap:

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 :smart: in your strategy or your emotions:-0!
 
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).
 
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/Literature/profitability.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.
 
(my contribution to the string of useless numbers)

% edge == 100% - [(E(X) + $L) / $L]
 
...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.
 
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.
 
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.
 
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.
 
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.
 
I agree with Bramble, its well known but perhaps not well accepted that maths in trading only benefits working out risk. There will always be patterns in maths in this industry that have a semblance of logic and associated warm fuzzy feeling inside that it works and makes sense. In the real world, you are entering a labyrinth of misguided coincidence.
 
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.


Yes, it can. My system runs between 93% to 97% accuracy to a specified target and under a defined MAE. Occasionally, the systems sees what I call the Out of Phase Performance Bracket, where it takes a rapid nose dive down to near 89% to 93%, before popping its nose back up, hammering the throttle forward and soaring into the high 90's again. Of course, it cycles back down to near the 93% and then levels off for a while. It has been following this cycle/patter for the past three (3) years now and I've decided to freeze the system and not over-tweak or over-optimize it to the point of breaking it.

I can live with the performance life cycle at this point and have actually developed a negative performance break-out theory that I am now testing, where I will use the failed trade patterns to artificially boost the overall trade performance. I'll do this by allowing the system to run, but turning "Off" the actual trade signal, when the system gets beyond its historical breaking point 97%. I'll then wait for the system to fail into its Out of Phase Performance Bracket (the high 80's) and then allow the trade signal come come alive again and take what should be a high probability trade sequence back up the ladder to the high 90's.

It should have an afterburner affect on the overall system accuracy. At least, that's my theory until the results dictate otherwise. Yes, it can be done, but not with inside the box thinking and blinders on, which is what you will find on most trading boards these days, unfortunately.

Example: You have so-called "experienced traders" who still don't know how to trade a simple Moving Average Crossing methodology, to its maximum degree of profitability. An MA Crossing methodology is not the most efficient way to trade, but its extremely simple, easy for the Newbie to get their head around and profitable when done properly - though not as profitable as a true Predictive Model for trading that actually works.

So, I would say, be careful when you ask for "expert" advice online and make sure that the people giving you advice, know what they are talking about AND can back it up with proof. I have on thread for Newbies on an MA Cross method that will be clearly demonstrated to work - to the degree that such a method can be profitable. It is a very good method for teaching some very important lessons to the Newbie, such as Magnitude and the importance of knowing that there are certain patterns in the market that love to repeat themselves on a very frequent basis. Those lessons can be carried over into more advanced forms of trading system development down the road and such lessons, once learned, can pay significant benefits in your research.

Learning about pattern recognition and the concept of magnitude early on in one's trading career, is priceless.
 
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).


Not without a ridiculously anemic equity curve that would look more like the flat line of someone just having a coronary in an emergency room hospital without the benefit of having been successfully revived, nor without an absurdly large RR ratio that in and of itself, would become problematic as variable Magnitude would flatten too many good trades into poor trades that never reach their necessary target, in order to satisfy the mathematical requirement of maintaining a useful equity curve, as defined by having such a ridiculously large RR ratio in the first place.

The only meaningful (real world) thing you are going to be able to do with a 10% win ratio, is look at it in the mirror. It has no real world practical application for anyone serious about steepening their equity curve.

There is no secret that for weak trading systems and/or methodologies, one has to compensate with larger RR ratios. The problem with that approach that typically does not get discussed by the people pushing it, is that the magnitude of each trade is constantly in a state of flux and at some point, magnitude will drop and those trade with good Timing and Direction, won't reach their necessary limit level - defeating the entire purpose of squeezing the Stop and extending the Limit.

But, of course, someone with years of research such as yourself, has already done that math and knows better. Right.

Right.
 
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