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There are two different sets of trading methods that have the same trading performance over the years, one with a 30% win rate and the other with a 70% win rate. Excuse me, which one will you choose? Two-thirds of professional traders opt for the former; Almost all novices choose the latter. Why the difference?
Professional traders understand something that novice traders don't. In order to achieve the desired result, a method with a 70% win rate has very little room for error. What happens in a bad year (when you have a 50% win rate)?
Professional traders recognize that a 30% win rate approach has a better risk management structure. A method with a 30% win rate has more room for error. In fact, the 30 percent winning method assumes that more than half of all trades end up losing money. Any method will have good performance and bad performance. Trading underperformance should be internalized into the overall system.
As an old saying goes, "It is easier to make money in the commodity market than to keep it." It's full of wisdom. Holding your money is a skill of money management and risk management. The good times will never come unless traders can find a way to hold on to the principal in their pockets when trading goes bad.
The principle of
(1) The key to consistently profitable commodity trading is not to find some magical way to find profitable trades.
(2) Consistently successful trading is based on strong risk management.
(3) Successful trading is a process of patiently repeating things with discipline.
(4) The human part of the transaction is extremely important and has been ignored by other authors for many years. Recognizing and managing fear and greed is central to sustained successful speculation. I'm not going to pretend that I've perfected this.
(5) Even if most trades lose money over a period of time, the end result may still be profitable. The "process" trumps the outcome of any one or several transactions.
(6) The rules of chart trading are not magic, but simply provide a framework for the trading process.
From "Futures Sniper: 21-Week Trading Notes on Winners"
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