Forget about the win rate | Forexlive (2024)

“It’s not whetheryou are right or wrong, but how much you make when you are right and how muchyou lose when you are wrong”. This quote from George Soros sums up perfectlywhat trading is all about.

Beginner tradersdon’t want to experience the pain of loss, so they search for trading systemsthat have high percentages of success and regard the win rate as an importantmetric. Well, the win rate it totally irrelevant. You can be profitable with a30% win rate and unprofitable with an 80% one.

How? Well, if you have8 small winners and 2 big losers, you might end up at breakeven or even down.Risk management is key here. Most successful traders are right on half or a bitmore of their trades. For example, George Soros had a 30% win rate while theMedallion Fund, the best money making machine in history, had 50.75%.

The goal of a successfultrader is to take good asymmetric bets and cut off those that are not workingout as expected. That’s it. It’s about trading well.

This wrong focuson the win rate leads new traders to being scammed with trading strategies thatpromise very high win rates. They jump from one strategy to another as soon asthose promises don’t meet their expectations. This is a losing and dangerouscycle that ends up in a big waste of money and eventually a drop out oftrading.

Losses are anatural part of trading, and you just have to know how to deal with them.Unfortunately, in the beginning, you won’t have faith in your skills togenerate consistent positive returns, just because you’ve never done that. Youshould just learn how to trade and focus on trading well rather than tradingfor the money.

Once you achieve alevel where you see that you have positive returns over at least 6-12 monthshorizon, you will start to gain some confidence in your abilities which willhelp you immensely because you will know that even if you have short termsetbacks, your long-term success won’t be affected.