After taking some time off trading and venturing into punting on horse racing i have come to understand the importance of strike rate versus return on investment & turnover. Firstly drawdowns and risk of ruin are often underestimed and can turn punters who would be profitable with proper money management into losing punters. Secondly for psychological reasons, increasing strikerate and reducing drawdowns tend to reduce mistakes and improve quality of life away from the screen/track.
Take the below 2 hypothetical discretionary trading methods:
Method 1
average of 5 trades a week, 60% wins, risking 10 pips per trade, average win 20pips (40 pips a week)
Method 2
average of 10 trades a week, 50% wins risking 10 pips per trade average win = 20 pips (50 pips a week)
Method 1 is alot more attractive to me than method 2. Anyone out there who would or does leave profit on the table for the sake of improved win %?
Also, hoping a maths guy could help me out, how much value would i be giving up (if any) if i choose to trade method 1 versus method 2. Take into consideration the larger position size i could use in method 1 due to the lower drawdown.
Take the below 2 hypothetical discretionary trading methods:
Method 1
average of 5 trades a week, 60% wins, risking 10 pips per trade, average win 20pips (40 pips a week)
Method 2
average of 10 trades a week, 50% wins risking 10 pips per trade average win = 20 pips (50 pips a week)
Method 1 is alot more attractive to me than method 2. Anyone out there who would or does leave profit on the table for the sake of improved win %?
Also, hoping a maths guy could help me out, how much value would i be giving up (if any) if i choose to trade method 1 versus method 2. Take into consideration the larger position size i could use in method 1 due to the lower drawdown.