Thursday, 1 April 2010

Why Do I Want a High Win Rate Anyway

You all know by now that my number one requirement for my trading profile was a high win rate. Why is that important to me? What is wrong with a 33% winrate and average win size to average loss size ratio of 3 to 1? Throughout my years of trading I found that anything less than my 65% winrate gives me not only a much higher number of losing trades but also a huge increase of losing days.

The methodology I have shown in the blog has a win rate of over 65% and the average win being more than twice the average loss. Now a days I don't often have a losing day because: I rarely fiddle with my trading setups or trading plan and, because of the high winrate it rarely turns into a losing day. I do trade some lower % trades - outside in trades - that are not shown in the blog yet.

I have backtested my methodology and know what to expect. Knowing "what to expect" is a very important part of achieving CP (consistent profitability) because it is one of the necessary crutches I need to keep disciplined enough to stick to my trading plan. Why? Well, I think it is because if I had a low win rate, the number of possible losing trades in a row would be much higher and lots of losing trades in a row brings doubt into my mind and affects my confidence in my trading plan.

The mathematics of my trading plan is the cornerstone of what I do every day. I don't make any changes to it until I have both SIM traded it and backtested it and satisfy myself that it would be a permanent improvement in my win rate. I would not make a change to my trading plan that reduced my win rate unless the by product was to increase my average win size greatly.

Flobot entries for today's ES are below.

Click to enlarge


  1. Have you changed your K channel (30) settings ? I am trying to match my chart using your chart definition but at Entry # 3 the green candle is touching K channel in your chart but not in mine.


  2. Why are you using a 2xKeltner in this chart?

  3. There is no change to the Keltner I use. Sometimes I change settings for a few minutes for a particular setup to get a bit more info. I probably didn't change it back when I took the snapshot. 30/3 is correct.

  4. Tom,

    It appears to me that both Entry #1 and Entry #2 had opposite CVD color, aren't they supposed to be the same color of the VB at the moment of entry?


  5. Hi Tom,

    any reasons the flowbot did not take the trade of the bar close around 16.06? The bar closed red below a red EMA33, the CVDSMA(9)was red, too, CCI 45 was declining and close to zero and CCI6 was below zero for a while, EMA 99 would have been a far enough target for the trade. I'm just wondering and hoping for an explanation.