I've seen some of those. They exit as soon as they break even or make a small profit so they can claim a high winning percentage.
Exactly !
Winning rate is function of risk/reward. You cannot get around it, no matter what system you use. You go for a small risk/reward, you can easily design a system with high win rate. With a risk/reward of 1:1 i can easily design a system with 80-90% win rate. When you go for 1:5 or 1:10 risk/reward, you woud be lucky even if you get a 50% win rate.
Making money in the long run has got nothing to do with win rate. It has do with with consistency and slow compounding.
I have learn't some simple trading truths over the years:
Don'ts
1) Don't trade options. It's an inefficient instrument. Managing time decay, implied vol and direction all at the same time is a loser's game. Instead trade Futures or ETFs. You just need to get the direction right.
2) Don't use leverage beyond 2X. I used to trade 5X leverage with ES futures many years back when my account was small. Not anymore. You could get wiped out.
3) Don't day trade. You end up paying a lot in transaction fees and slippage. And you can't see your trade acheive it's profit objective, if you square off early. Besides, it will ruin your health in the long run. Humans are not designed to sit and watch the ticks all day. I realized this after watching every tick on the S&P for almost 10 years. Now once i put my trade on, place a stop, limit order for profits and go talk a walk, read a book or watch TV.
Dos
1) Try to get profitable consistently month after month, no matter how small the profits are. Of course there will 2 or 3 months a years you could go into losses. Try to keep the drawdown below 10%.
2) Compound your earnings over time. Most important !
Edited by NAV, 24 November 2018 - 01:15 AM.