Wednesday, 17 August 2011

Looking for Certainty

New traders always look for certainty in a trade. "I want to KNOW that this will be a winner". This search for certainty leads people to keep changing what they do. We are taught from an early age to do our BEST. To WIN. All these ideals reinforce our search for a 100% win rate.

I realised a long time ago in life that I don't need to always get the best deal. Yes, I try and get it and negotiate accordingly, but in the end I will settle for a deal that's GOOD ENOUGH. I have learned that if I consistently get a deal that is good enough, in the end I'll always be ahead.

I don't get the lowest price when I buy a car, but will certainly get rid of my unwanted trade in and have what I want. I'll buy my properties at well under market and replacement value in these types of markets, but I know that maybe I could have squeezed a bit more. But I did GOOD ENOUGH.

And so it is in trading. Yes, I have losing trades. Do I worry about it? No, because I do good enough. I KNOW I can't have a 100% win rate and the effort I would put into trying to achieve the impossible would wreck my trading. What I teach students is that 70% is good enough. If you can reach that, and most traders who do not have mentoring, don't, then you have achieved a great result.

Do all my students reach that goal? No, but a great majority do because they accept that there are 20% to 30% losing trades as the cost of doing business. They back test their strategy and see that the 70% winners make more money on a consistent basis than the 30% losers. And that's not only good enough but Bloody Good, mate!!!

A couple of DAX trades today to illustrate how trades can be filtered as part of a trading picture to improve win rate and profitability.

1 comment:

  1. Is there a way you could post a trade stats screen shot in addition to your charts? This can be done in a way to filter/hide personal info of course. Just something to better understand what this system/method is producing on average.