I received the following email from reader Ed:
Hi Mike,
I hope you’re doing great and all is well by you. I was wondering if I could run something past you if you don’t mind. I was the trader that Dr. Brett mentioned in his March 14 article, “the mistakes traders make.” I was wondering if you would mind telling me what the win rates at your firm look like. What is such a struggle for me is knowing where I stand relative to the time I have been doing this, which is less a bit less than two years. The toughest question that I ask myself is “how am I doing at this point?” Thx so much for your response, I really appreciate it.
Bella Responds:
Ed, terrific questions and great job working on your trading game! This effort illuminates how well you are probably doing and will do. Dr. Steenbarger is the ultimate source for trading advice so maybe we can get him to respond as well. He still responds to my emails so I will try and coax him into a blog response as well :).
Every trader has a different win rate. This depends on your trading style. A micro-scalper will have a very high win rate of perhaps 80 percent. A trader who focuses on Trades2Hold, longer-term intraday trades, may have a thirty percent win rate. Both can be exceedingly profitable.
Also your win rate will vary depending on the time of the day and time frame. My win rate is best on the Open and worst midday. A short term trader will have a higher win rate than a longer term trader.
What your win rate ought to be or how well you are doing might be dissected with these questions: When you review your trades are there set ups that make the most sense to you, that you have made your own? How can you make more of them? Are there trades that statistically do not work for you? GMan religiously keeps stats on what is working for him. He tweaks his trades depending on his stats. Some trading periods he focuses on micro-scalping and others Trades2Hold. He lets his stats lead the way. And now he is a Partner!
Make more of the trades that work best for you and get rid of the ones that are not working.
Thanks for your question.
11 Comments on “Your Win Rate”
Mike,
It’s an honor to be mentioned on your blog. Thank you! Your response is very insightful, extremely helpful, and encouraging. As Gman does, I keep painstakingly detailed records of my trades. I also print out charts of everyday so I could go back and find out what worked. Dr. Brett’s suggestion has had me up very late at night working on the answers. But it feels great. I love the puzzle. thx again for responding to me.
Eddie
Mike,
It’s an honor to be mentioned on your blog. Thank you! Your response is very insightful, extremely helpful, and encouraging. As Gman does, I keep painstakingly detailed records of my trades. I also print out charts of everyday so I could go back and find out what worked. Dr. Brett’s suggestion has had me up very late at night working on the answers. But it feels great. I love the puzzle. thx again for responding to me.
Eddie
how bout a post on overtrading. i think thats very relevant to this market.
how bout a post on overtrading. i think thats very relevant to this market.
how bout a post on overtrading. i think thats very relevant to this market.
Excellent topic!
FWIW, I meet very, very few traders with win rates of 80% or 30%. If a win rate per trade is 80% for a scalper, it would be nearly mathematically impossible to have losing days. And that doesn’t happen, in my experience. I don’t see many 30% win rates, because those traders tend to not last in markets. It’s psychologically difficult to lose 70% of the time and then count on the fewer, larger gains. And when markets shift, those gains don’t come and the trend follower bites the dust.
What I do see is that it doesn’t take much of a win rate north of 50% to translate into solid profitability if risk management is good. Small edges compound over time. Many, many successful prop traders I know would not be profitable if their execution costs were at common retail levels. They have a small, but replicable edge and exploit that edge with good size/risk.
Where I see considerable variability is in Sharpe ratios. Some traders make frequent, smaller gains and draw down little; others swing larger and make lumpier, larger gains. That difference seems to reflect personality differences among portfolio managers.
Brett
Excellent topic!
FWIW, I meet very, very few traders with win rates of 80% or 30%. If a win rate per trade is 80% for a scalper, it would be nearly mathematically impossible to have losing days. And that doesn’t happen, in my experience. I don’t see many 30% win rates, because those traders tend to not last in markets. It’s psychologically difficult to lose 70% of the time and then count on the fewer, larger gains. And when markets shift, those gains don’t come and the trend follower bites the dust.
What I do see is that it doesn’t take much of a win rate north of 50% to translate into solid profitability if risk management is good. Small edges compound over time. Many, many successful prop traders I know would not be profitable if their execution costs were at common retail levels. They have a small, but replicable edge and exploit that edge with good size/risk.
Where I see considerable variability is in Sharpe ratios. Some traders make frequent, smaller gains and draw down little; others swing larger and make lumpier, larger gains. That difference seems to reflect personality differences among portfolio managers.
Brett
Dr. S,
Have you met Zmoney from SMB’s desk? I think on many days his win rate is around 80%. I believe he has had one gross negative day in the past two years.
We have the Chop Tracker created by Gman to calculate the percentage of profitable trades we make each day. I may have an intern start to track each traders daily win rate and see how that relates to their longer term profitability as well as their overall sanity.
Steve
Hi SMB.
Creating pressure about being right more than wrong is not necessary.
A professional trader who does his job can be wrong 80-85% of time and still break even at least. 🙂
A traders job is :
1.to be wrong and admit it while staying humble if winning-we all know traders can be right all the time and than lose it all in one trade because they feel they are above the market.
2.be emotionally stable at all times either right or wrong.
Al the best i love your blog bella
Hi SMB.
Creating pressure about being right more than wrong is not necessary.
A professional trader who does his job can be wrong 80-85% of time and still break even at least. 🙂
A traders job is :
1.to be wrong and admit it while staying humble if winning-we all know traders can be right all the time and than lose it all in one trade because they feel they are above the market.
2.be emotionally stable at all times either right or wrong.
Al the best i love your blog bella
Hi SMB.
Creating pressure about being right more than wrong is not necessary.
A professional trader who does his job can be wrong 80-85% of time and still break even at least. 🙂
A traders job is :
1.to be wrong and admit it while staying humble if winning-we all know traders can be right all the time and than lose it all in one trade because they feel they are above the market.
2.be emotionally stable at all times either right or wrong.
Al the best i love your blog bella