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What is your win rate and risk reward ratio?

  • #41
  • May 19, 2013 6:23am May 19, 2013 6:23am
Quoting 60minuteman
{quote} well we know it's not 2/1 or more, because if the majority of traders have a 50% win rate and their RR is 2/1 or more then most retail traders would be making profit, and they're not. Therefore most traders have a R/R of 1/1 or less and that results in most traders losing money
Yes, implying that all trades weren´t messed around with after they were put on, which is highly unlikely. But you can not come to this conclusion solely from the fact that losing traders have a 50% hitrate, since it only means that 50% of all trades were closed in profit. Maybe some set their TP to BE+1 after their trade went in their direction for a few pips and got stopped out before it could hit their initial TP, maybe they lowered/raised their TP while in the trade etc.; people close & alter trades prematurely for a myriad of reasons.
  • #42
  • May 19, 2013 6:34am May 19, 2013 6:34am
Quoting Myo
{quote} Yes, implying that all trades weren´t messed around with after they were put on, which is highly unlikely. But you can not come to this conclusion solely from the fact that losing traders have a 50% hitrate, since it only means that 50% of all trades were closed in profit. Maybe some set their TP to BE+1 after their trade went in their direction for a few pips and got stopped out before it could hit their initial TP, maybe they lowered/raised their TP while in the trade etc.; people close & alter trades prematurely for a myriad...
true, but what we do know is that the average win rate is not very high... i.e it's generally around 50%... So if we know we should be able to achieve that at least, we know we really need to find a way to at least hit 2/1....

If we achieve that then over time our hit rate may also improve to greater than 50%....

But, if we start out with the belief that we are going to take profit at 1/1 the possibility of improving is already made much much harder to achieve.
tradewith60
  • #43
  • May 19, 2013 6:35am May 19, 2013 6:35am
Quoting 60minuteman
{quote} neither luck or religion will get you through long term Kho... chok dee krap
cut your losses short,,sound like a cliche,,,but very powerful and reliable,,
I believe it,,
the question is;
how short ,,?
and when,,?
with a very long flying hours, you can feel which has high probability

Don’t be afraid to take a profit ,,,
Don't let good profit turn into bad losses,,,
difficult to determine the exact height or lowness how birds can fly

salaam
  • #44
  • May 19, 2013 8:09am May 19, 2013 8:09am
Quoting 60minuteman
For Delta and anyone else who is serious about protecting their capital http://fxevolve.com/blog/how-to-buil...ng-risk-model/
Thanks for the video 60mm. very useful.
Attached Image (click to enlarge)
Click to Enlarge Name: 051913.jpg Size: 72 KB
Weigh well output the loss and gain And proper action ascertain
  • #45
  • May 19, 2013 8:49am May 19, 2013 8:49am
It's best to have both a high positive trade % and a high reward-to-risk ratio, which can be achieved by letting winning trades run (and adding positions as it runs), and limiting losses by entering at the right, best time (assuming you know how to trade). What hasn't been discussed here is the role of good MM. For example, if you are entering a trade at the beginning of a long run (and isn't your job really all about finding those?), your plan is to enter multiple trades as PA runs, with the first trade having the "best" stop possible, and risking the least amount of your margin account at that trade. If your TA tells you the trade will run 100 pips, your objective is to get 150 pips out of it, while risking maybe 20-25 pips (at maybe 1/2 of 1% of your margin account) on the first trade. As the trade runs and proves itself, you can add more positions while risking more of your margin account. How much are you willing to lose on this trade? 1/2 of 1%. How long can you stay in the winning run? Until you get everyone else's money, which will often be well beyond the 100 pip target. So, the real measure of this discussion of R:R and winning percentage is this: if your losses are at 1/2 of 1%, and your successful trades are at 10%, then you are really thinking of an entirely different ball game.
  • #46
  • May 19, 2013 2:27pm May 19, 2013 2:27pm
Quoting 60minuteman
{quote} From 72% win rate the chance of it improving, slim too none, the chance of it dropping, very likely...fuck up's, mistakes, freak news, etc etc. This risk model leaves no room for error. I would feel far more secure with 25% win rate and 5/1 RR... Personally I try to plan trades around 50% (not too hard to achieve with just a little discipline) and minimum 3/1 RR... again, not hard with some practice.... Then you always have the odd few where you catch a big runner to bump your overall average up. Remember if you're always getting out...
I am a little confused here. At a 1:1 R:R, genie only really needs a 51% win rate to actually show a profit. If they are at 72, isn't there plenty of room for "...mistakes, freak news, etc..."

Unless my understanding is wrong, even someone with a 2:1 ratio would only need a 67% win rate to actually profit. No, the profit would not be large, but it would not be a loss long term either. Isn't there a direct correlation between ratio and win rate to be successful?
  • #47
  • May 19, 2013 3:57pm May 19, 2013 3:57pm
Quoting Slow Burn
{quote} I am a little confused here. At a 1:1 R:R, genie only really needs a 51% win rate to actually show a profit. If they are at 72, isn't there plenty of room for "...mistakes, freak news, etc..." Unless my understanding is wrong, even someone with a 2:1 ratio would only need a 67% win rate to actually profit. No, the profit would not be large, but it would not be a loss long term either. Isn't there a direct correlation between ratio and win rate to be successful?
ok... For a start, you always need 3 figures, well really 4, but 3 is essential.

We need to know, RR. Win rate and %age risked per trade (the 4th is trade frequency.)

Now taking the 1/1 RR as an example, risking 2% of account per trade is fine at 70% win rate, there is in fact zero % chance of wiping your account....

But.... if for some reason your win rate drops to 50% (which is in fact the average win rate for retail traders) and your RR stays at 1/1, and you continue to risk 2% per trade... your risk of ruin is now 100%

RR of 2/1 risking 2% per trade you need to drop all the way to 30% win rate before you risk of ruin hits 100%

RR of 3/1 you need to drop to 25% win rate before your risk of ruin hits 100%


Long story short you have to stack the odds as much in your favour as possible, 1/1 RR is by far the riskiest form of trading.

Dropping from winning 7/10 trades to 5/10 will guarantee you wipe your account over time, doesn't leave much room for error in a risky environment does it?

There's stacks and stacks written about this in just about every published trading manual, funnily enough not on FF forums... Decide for yourself why that is...

http://2ndskiesforex.com/strategies-...-risk-of-ruin/
tradewith60
  • #48
  • May 19, 2013 5:47pm May 19, 2013 5:47pm
Quoting 60minuteman
{quote} Now taking the 1/1 RR as an example, risking 2% of account per trade is fine at 70% win rate, there is in fact zero % chance of wiping your account....

But.... if for some reason your win rate drops to 50% (which is in fact the average win rate for retail traders) and your RR stays at 1/1, and you continue to risk 2% per trade... your risk of ruin is now 100%

RR of 2/1 risking 2% per trade you need to drop all the way to 30% win rate before you risk of ruin hits 100%

RR of 3/1 you need to drop to 25% win rate before your...
However, in the article you linked, it also states: "In trading, it is actually harder to increase the profit target from 2:1 to 3:1 than it is to increase your accuracy ratio of 5%." So a change from 72% to a more hopeful 77%, would actually be easier to achieve than moving from a 1:1 to a 2 or even 3:1 RR. I would think that depending on one's trading style, trying for a 2:1 RR might actually have an adverse effect on their win ratio (moving from a 72% to a 67% or worse).


Quoting 60minuteman
{quote} Long story short you have to stack the odds as much in your favour as possible, 1/1 RR is by far the riskiest form of trading.

Dropping from winning 7/10 trades to 5/10 will guarantee you wipe your account over time, doesn't leave much room for error in a risky environment does it?

There's stacks and stacks written about this in just about every published trading manual, funnily enough not on FF forums... Decide for yourself why that is...

http://2ndskiesforex.com/strategies-...-risk-of-ruin/...
I will admit, that this is an area I still need to work on, and I really appreciate the link. It gives something to think about.
  • #49
  • May 19, 2013 6:10pm May 19, 2013 6:10pm
Quoting Slow Burn
{quote} However, in the article you linked, it also states: "In trading, it is actually harder to increase the profit target from 2:1 to 3:1 than it is to increase your accuracy ratio of 5%." So a change from 72% to a more hopeful 77%, would actually be easier to achieve than moving from a 1:1 to a 2 or even 3:1 RR. I would think that depending on one's trading style, trying for a 2:1 RR might actually have an adverse effect on their win ratio (moving from a 72% to a 67% or worse). {quote} I will admit, that this is an area I still need to...

attention to detail is essential slow...

the article says from 2/1 to 3/1.... not from 1/1 to 2/1 as is the case with this thread.

and the example you're quoting is for a 35% win rate... which is in that case easier to improve than moving from 2/1 to 3/1..

The op of this thread is the other end of the curve, 1/1 RR and 72% win rate, in this example increasing RR will be easier than increasing win rate.

If the op was 72% win rate and 2/1 RR then this whole thread would be very different
tradewith60
  • #50
  • May 19, 2013 7:22pm May 19, 2013 7:22pm
Risk Management: A Look at the Most Critical Formula

http://www.fxstreet.com/webinars/ses...2-78566af41e47
tradewith60
  • #51
  • May 19, 2013 8:15pm May 19, 2013 8:15pm
The problem with RR is that no one knows where the markets will go, the only thing you are certain is what your risk is (your stop loss). The higher the R/R ratio, the lower your win ratio becomes simply because you are more prone to get stopped out before you reach your limit order. The thing people neglect is that even with good R/R ratio trades, they still need to manage their trades. Say you had an trade +200 pips in the money, yet your initial limit order is at +300 pips. This trade topped out a +200pips and reversed/pull back and stopped you out. Hence you just threw away "sure money" and turned the trade into a loser. Manage your trade, take 50% of the position off at profit, and let the rest run to your initial limit or break even stop out. This ensures that you increase your win ratio and keep intact your R/R.
Trade what you see, not what you think!
  • #52
  • May 19, 2013 8:24pm May 19, 2013 8:24pm
Quoting OMGtrader
The problem with RR is that no one knows where the markets will go, the only thing you are certain is what your risk is (your stop loss). The higher the R/R ratio, the lower your win ratio becomes simply because you are more prone to get stopped out before you reach your limit order. The thing people neglect is that even with good R/R ratio trades, they still need to manage their trades. Say you had an trade +200 pips in the money, yet your initial limit order is at +300 pips. This trade topped out a +200pips and reversed/pull back and stopped you...
I don't agree, if you have no idea where to get out, how have you got any idea where to get in?

When you come to exit the trade you have exactly the same information when you got in.... how is it different?

There are clear patterns and probabilities, if there is a high probability price will continue in your direction you stay in until the conditions change or you achieve your desired result.
tradewith60
  • #53
  • May 20, 2013 12:41am May 20, 2013 12:41am
You can't beat this guy .....
Quoting Guardmaker
I have made 924 trades on 27 different demo accounts with 65 lost trades, that is 859 winning trades. Of these 27 demo accounts, I have won 100% of the trades made on eleven of them. My current best 'winning streak' is 128 winning trades. In 112 trading days, I have made $283,000.00 on these demo accounts. Would have been higher, but between work and getting bored, it is what it is. When I opened my first demo, I made 56 trades in twelve hours. I won 54 of them. I lost $800.00 on the two losing trades, but made $16,080.00 on the other...
No longer trading forex. Looking for full time job.
  • #54
  • May 20, 2013 2:20am May 20, 2013 2:20am
Only trade when the M1, W1, D1, H4, H1, 15M and 5M are diverging.
  • #55
  • May 20, 2013 4:02am May 20, 2013 4:02am
Quoting mmaker
You can't beat this guy ..... {quote}
and that's exactly why I don't have a thread on FF anymore
tradewith60
  • #56
  • May 20, 2013 3:58pm May 20, 2013 3:58pm
This assumes that for every trade you take your SL if fixed with respect to your TP. What if your SL changes over the life of the trade? Is true that some trades will go straight for your SL but, if for example, you adjust stops based on PSAR then your SL is likely to be reduced even if the trade ends up at a loss. Would you consider that in that case your R/R changed over time? Basically your losers could have potentially lost more than they did. i am trying something like this currently and if you look at my trade explorer it doesn't look good so far but I have not blown my account just yet.
Please pull my head out of my ass, I am running out of oxygen...
  • #57
  • Jul 12, 2022 6:31am Jul 12, 2022 6:31am
In all fairness, the only person who actually answered the thread question was the OP himself - 72% with a 1:1 RR at the time. Would be interesting if the likes of @60minuteman would give his stats too instead of just arguing what a bad idea an RR of 1:1 is.

Granted I understand that in some cases, one may target a 1:3 and end up taking a 1:1 as market structure dictates so, but averages exist.

So let's say genie had a 72% win rate with 1:1 RR, maybe someone always takes fixed RiskReward of 1:2 and hits 42% and is still therefore in profit, maybe someone would go for 1:3 but sometimes lets their profits run to (ex):1:8 or just a 1:1 depending on market conditions but averages, for example, 1:2.8 and hits 38% win rate.

Nobody answered the guy's question and that would be quite an interesting stat to know I think
  • #58
  • Jul 12, 2022 9:09am Jul 12, 2022 9:09am
Different strategy’s require different winrates/rewards.
I feel the win rate does not matter too
much, when trading. Investing a different story maybe.
In my experience the focus should always be on getting discounts whilst remaining emotionally stable. Not always easy especially in the beginning.

I’m finding theres anywhere from 10-20 full projected successful trades every usa closing session. (1-2 hours). On the ES futures.
basically 2:1 to 5:1 for the winners so as long as you keep calm, get the deep tests youll smash it.
Out of 15 trades. Say, I lose 6 (-6), miss 5, but win 4 (10)
using 2.5 as the conservative overall win average i walk away 4:1 up even though only 40% winrate. at around 2% risk thats 8%. In under 2 hours work.
  • #59
  • Jul 12, 2022 9:39am Jul 12, 2022 9:39am
Quoting deltatrade
... mathematicians and their logic always suck at trading just look at everything that has in it the phrase mathematical model. i have never ever seen someone who comes from a mathematical backround and has success in the markets in the long run. every mathematician hedge fund fails. ...
deltatrade, haven't you heard of James Simons? He is a mathematician and the founder of Renaissance, a very successful hedge fund that's been around for decades.
~ Bill
  • #60
  • Jul 12, 2022 6:37pm Jul 12, 2022 6:37pm
Quoting calaxcorp
{quote} deltatrade, haven't you heard of James Simons? He is a mathematician and the founder of Renaissance, a very successful hedge fund that's been around for decades. ~ Bill
In fairness, this is a really old thread and I doubt a lot of people knew about Renaissance back then.
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