Major overlook with this (microcosm) explanation/thinking... Trader does not get to choose the sequence of trade outcomes. How would you feel if you took 28 consecutive losers before you got 12 consecutive profit-conforming gainers? The trader does not get to choose the sequence of W/L. WL Ratio is an important metric with the caveat volpri eluded too... depends on the type/style of trading. WL Ratio can give you an idea of validity on a particular setup or style of trading. Beyond that, WL ratio has little use without a complete understanding of (average?) win/loss amounts, not the WL ratio itself. Much much better metrics to work with, better as in helpful to become a more consistently profitable trader are MFE and MAE... These are metrics that CAN be improved upon in different trading environments, which is a full 180 from the uncontrollable sequence of trade outcomes.
8 points is a very big scalp. Are you catching those big 1-minute candles like we had at 8:30 today or are you riding a scalp into a longer term trade?
As an example. 4 scalps this morning all winners. market going no where. All long scalps. Except the last on was an averaged down scalp.
Actually in recent volatile markets I raised that to 12 points. I know it is different than how most define scalping but that is how I define it. I also call it "manual HFT trading." I trade off 5 minute charts and occasionally maybe off a 15 minute. It is rare but I will sometimes fine tune an entry on a 5 min chart with a 1 min chart.
Our win rate is 40%-45%, but the profit factor is above 2 thanks to position size management, this is how we are able to beat the market over the long run, add low commissions and a tight regime of buy stop, sell stop orders and that's basically it, no rocket science, just math + discipline
Win percentage on its own is absolutely worthless. A strategy with a +80% win rate can lose money and a strategy with a 20% win rate can make a very nice return.
Agree, Same here, we run at around 40% win rate, but that's the last number I look at, some of our options strategy stand at... 20%! But when 1 out of 5 is a big winner, it covers the losers and then some.. When someone posts his (it's never hers, is it ) 95% win rate I smell a rat
I have to say that all the swing trading strategies I have tried with average down turned out losers, 85% win rate mind you, but these 15% losers killed the strategy
I honestly think many retail traders don't even know their numbers and I agree the are probably at 50%,monitoring your track record for the numbers is crucial