Your Pscyhology needs to be right with this type of win rate. It is difficult to keep taking the trades.
The higher R makes up for the losses, but you have to be right in your head is what I'm saying. :nerd:
In an early post of mine on this thread, I spoke of trading a system with a 4:1. Even though the win rate was 35%-40% and the monthly average R multiple was 8 (considered xlnt for a daily system requiring no monitoring intraday), it was profitable because you only needed 20% to break even. I stopped trading it because once a year on average there was a drawdown where there would be 12+ losing trades in a row. At the worst, it was a 16R drawdown top to bottom in my account. This can be demoralizing.
So fisheggs point is well-taken. It depends upon the trader and how they are wired. I am wired more like Steven, who puts consistency above all else. That lowers stress for me. At the same time, from my stock trading days, I know that each year there were two or so giant winners that really jacked the account up and made all the difference between a good year and something more than that. Nowadays, I want to recognize certain days for what they are: those rare beings that can really make a difference at month-end if bigger R trades are allowed to run. So I am more weighted in the consistency camp, but with some exposure to the bigger R multiple camp.
A respected FF member writes that he used to trade with a bunch of guys every day. One guy used tight stops and would bring his s/l up to b/e quickly. Much of the time he was stopped out repeatedly. But every once in a while, he would get a major runner that he would let run and run, and that would put him well into the black.
One thing is for sure, the more you depend upon your trading account for your livelihood (rent, mortgage, kids education, retirement, etc), the more you will likely take the "1R a day keeps the doctor away" mentality and go for the bird in the hand.
There is no wrong way to trade. There are only results.
nice post Cali
