Are the better traders closer to 100% winning trades, or is that just the way it seems? In contrast, the closer the traders are to 0%; it would seem that they are worse. There is more to trading than winning the most possible trades, even though that seems peculiar. This article will hopefully help fill you in on why I would argue that a 95% win rate is infinitely worse than a 65% win rate.

First we’ll take a look at traders with a low win rate. We will classify 0% to ~40% as low. If a trader fits into this range, then the closer they are to zero probably means the worse they are. Most traders in this lower range are losing traders. You will occasionally find a trader who attempts to catch very large moves with very tight stops. This type of trader may have an extremely low win % and still be a very successful trader.

The next range is from ~40% to ~70%. This is the range most winning traders will be in. The reason these traders win is not because they pick a ton of winning trades and rarely have a loser. They may in fact have more losing trades than winning trades. The reason they are able to win is that they properly manage their trades once they are open. They use reasonable stops that will often be executed. This obviously results in a losing trade, but a small loser. These small losers are only a fraction of the size of their winning trades. These are most often the traders that have the ability to cut their losses but let their winners run. This seems like a simple concept, but very few traders have the discipline to actually do it.

The final group we are going to be concerned with is the one with very high wins of greater than 70%. More people gravitate to them the closer they get to the 100% mark. These people should do the opposite and leave such traders alone. Unfortunately, few of them do. By taking profit off of the table immediately on appearance, these traders seem to have an extremely high win record. This strategy would work if these same traders also cut losses in the same manner. Traders who have a 95% plus win rate will not be looking at this strategy. They will normally let a loser run ad infinitum and even add to that position much of the time rather than accepting the small loss and moving on with their trading day. Allowing a loser to run like this will in the course of time wipe out months or more of winning trades in one fell swoop and is definitely not the road to success. Keep in mind that one 500 pip loser wipes out all the gains of 500 one pip winners. On the surface, this type of trader has over 99% winning trades. In fact, he could easily have an overall losing record.

Do not think for one minute that the reason for this article is to convince you that no trader outside the specified ranges is automatically a losing trader. I’m quite sure that there are traders that are successful with a win percent falling outside of the above ranges. The point of this article is to lead you to thoroughly investigate the trader with the 95% win rate as he could implode upon himself (and you) at any minute.

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