Success rate

Hi there. Still new. Been studying for 4 months now realise there is no one indicator to give me 100% winning trades and so I am back to learn the basics and manage risk.

I am wondering what % of success people get on their trades. So I was working on the basis of 50 % success, where profit is double money risked should result in a profit. Does anyone else have an opinion?

It depends very much on what kind of trading you’re doing, on reward-to-risk ratios, and so on.

Be aware that a method with a 30% success-rate and a reward-to-risk ratio of 3:1 is nearly twice as profitable, in the long run, as a method with a 75% success-rate and a reward-risk ratio of 0.5:1.

If you have a look in books like Tushar S. Chande’s [I]Beyond Technical Analysis[/I] and Van K. Tharp’s [I]Trade Your Way to Financial Freedom[/I], you’ll find some interesting explanations of why it’s typically easier and safer, overall, to try to make consistent profits [U]from trend-following trading methods[/U] with success-rates of between 25% and 50% than it is from methods with success-rates above 50%. (If that surprises you, as it surprises many people, I [I]strongly[/I] recommend reading those two books.)

But it’s still [I]possible[/I] to make steady profits from some methods with far higher success-rates, even though their reward-to-risk ratios are typically rather poor.

Success rate for me is not a determining factor to be profitable trader. I know some of my friends who keep showing me 90% success rate and even 100% success rate.

But when I found out, they kept burning their accounts. The reason here is they keep adding multiple trades and hoping the market will return to their favor.

Basically, they might right the market will somehow turn back to their favor but no one knows when. The problem is their accounts can’t withstand for a long floating losses and eventually got a margin call.

I advise to focus instead of learning the skill to turn losing trade into winner. Successful traders know exactly how to manage their losing trade.

Also, keep on guard of your emotion. If you can automate your system much better.

The emotion but is the killer for me I think. Thanks for the feedback. I will take a look into the books.

Yes; success-rates approaching 100% typically conceal huge drawdowns and eventually lead to a wipe-out.

In my experience, that tends to be determined by the market rather than by the individual trader.