Focus more on the risk/reward than winning percentage.

[fxpriest]

Focus more on the risk/reward than winning percentage.​

How big your wins are versus the size of your losses determine your profitability more than your win rate in trading. A few huge wins can make you profitable after a bunch of small losses. It’s more important to focus on the magnitude of your wins than being right on every trade.

At trade entry the risk/reward ratio measures a trades potential loss size versus the magnitude of potential profits. In backtesting the average of all the losses in a system in relation to all the average gains equals the risk/reward ratio of your system based on historical price action. For discretionary traders your stop loss versus your profit target quantifies your risk/reward ratio before entering a trade.

What your win rate needs to be for profitable trading is dependent on the risk/reward ratio your strategy creates over time. The higher your risk/reward ratio the lower your winning percentage must be to make money.

 

[Charles Agustin]

Earning success overnight is nothing but a daydream. A trader’s performance goes through several stages to reach the stage of development. Every after a period of time, traders have to evaluate themselves for further development by fixing the issues. Eurotrader provides a free educational program and a demo account.