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4. e-Learning with the TradingMasteryHub - Risk Management 1x1🚀 Welcome to the TradingMasteryHub Education Series! 📚 Are you looking to level up your trading game? Join us for the next 10 lessons as we dive deep into essential trading concepts that will help you grow your knowledge and sharpen your skills. Whether you're a beginner or looking to refine your strategy, these lessons are designed to guide you on your journey to better understand the markets. 📊 Manage Your Risk with These Three Simple Methods! In trading, managing risk effectively is crucial to long-term success. Even the best strategies can fail if risk management is ignored. In this session, we'll explore three key methods that every trader should master to protect their capital and stay consistently profitable. 1. Position Sizing: Trade Smart, Trade Safe Position sizing is the foundation of risk management. I always set a daily and weekly stop-loss limit to ensure that I can recover mentally and financially from any losses. My daily stop-loss is capped at 5-10% of my entire trading account, and I never risk more than 30% of that daily limit on a single trade. Each trade's risk allocation depends on the quality of the opportunity: - 5-star setups: Up to 30% of the daily stop-loss. - 4-star setups: Up to 15% of the daily stop-loss. - 3-star setups: Up to 5% of the daily stop-loss. I only trade 4-star setups and above to avoid overtrading and the temptation to jump into random market opportunities. This disciplined approach ensures that I’m only putting my capital at risk when the odds are strongly in my favor. 2. Stop-Loss Orders: Protect Your Trades with Precision When setting stop-losses, I place them at strategic points highlighted by the market, such as significant support or resistance levels. To avoid premature stop-outs due to market noise, I set my stop-loss beyond the spread and the market’s natural fluctuations. For example, if the FDAX is in an uptrend with the last higher low at 17,000 points and the spread is 15 points, I would set my stop-loss at 16,967 points (17,000 - 15 - 17). This ensures that my risk/reward ratio (R/R-ratio) is correctly calculated. Before entering any trade, I carefully assess whether the potential upside justifies the risk. If the R/R-ratio isn’t favorable, even for a 5-star setup, I might avoid the trade to protect my capital. 3. Diversification: Tailor Your Strategy to Your Comfort Level Diversification is another critical aspect of risk management. As a trader, you can choose to focus on a handful of ticker symbols or spread your risk across a broader range of assets. The first approach, trading a few instruments, is easier to manage and ideal for strategies like market profile trading in FX or indices. Alternatively, you might opt for a more diversified portfolio, trading up to 50 different stocks at once. In this strategy, each trade only represents a small fraction of your total risk capital—such as your daily stop-loss. This minimizes the emotional strain of trading, as each individual trade carries a smaller risk. With a solid strategy, you can manage all trades effectively, spreading your approach across calls, puts, different markets, industries, and volatility levels. However, this approach is typically better suited for larger accounts, where spread costs won’t significantly impact your profits. 🔚 Conclusion and Recommendation Risk management isn’t just about protecting your capital; it’s about maintaining the psychological stability needed to trade consistently. By mastering position sizing, setting precise stop-loss orders, and choosing the right diversification strategy, you can navigate the markets with confidence and discipline. Remember, successful trading isn’t just about finding the right opportunities—it’s about managing those opportunities wisely to ensure long-term profitability. By focusing on high-quality trade setups, calculating your risks accurately, and diversifying appropriately, you’ll find that you can maintain your composure even during losing streaks. This approach not only protects your account but also keeps your mind clear and your emotions in check, paving the way for sustained success. --- 🔥 Can’t Get Enough? Don't Miss Out! Subscribe, share, and engage with us in the comments. This is the start of a supportive trading community—built by traders, for traders! 🚀 Join us on the journey to market mastery, where we grow, learn, and succeed together. 💪 💡 What You'll Learn: - The fundamentals of trading - Key technical and sentiment indicators - Risk management strategies - And much more!... Best wishes, TradingMasteryHub
NASDAQ:AMDEducation
by TradingMasteryHub
Backtesting Settings For the Logical Trading Indicator V.1Since creating the Logical Trading Indicator, my trading game has changed in a big and positive way. But I have been curious as to how I can make an automated strategy with it and how much it makes. The Logical Trading Indicator has many different signals and alerts that you can use to create your own trading strategies that work best for your trading plan. Over the weekend, I have been tinkering around with the base strategy of buy when I get a buy signal and sell when i get a sell signal. I have played around with both a long and short strategy mainly focusing on the BTCUSD pairing. I am really doing this to help me find the best settings possible for each time frame and letting the strategy do the backtesting for me. This really helps me to figure out how it does over the past year or so. So far, at least for BTC, a LONG only strategy has yielded the best results. Mainly because I couldn't get it to fire shorts the way I wanted it to. This is where machines still need some human guidance, as well as your trades, haha. Dialing It In What I am doing is going into different timeframes and finding the best settings for the ATR multiple and length in combination with basis length and the long period moving average. I have been recording the results primarily on the 5 minute as well as the 1 HR and 4 HR time frames because those are the main time frames I focus on. I have played around with different variations of functions, but TradingView can't seem to get things to fire on the strategy the same way I can get the main indicator to fire. But based on this, I set the strategy to a simple LONG only strategy where it buys when you get a BUY signal and then closes when you get a SELL signal, with the addition of a stop loss function that let's me set a stop loss percentage to provide some additional risk management to help with the drawdown percentage. In this backtest, the strategy was not taking the 'Take Profit' signals into account, or when I tried to include them in the logic, they weren't firing properly, so I kept it simple with just the BUY and SELL signals with a stop loss. If you used the built in take profit signals, you can do even better than these results. On the 5 minute time frame, the most profitable settings ended up being: ATR Multiple: 3 ATR Length: 1 Basis Length: 15 EMA Long Period Moving Average: 50 SMA These settings yielded over 100% profit for the backtesting period, which is about a year. For the 1 HR time frame, the winning settings were: ATR Multiple: 3 ATR Length: 6 Basis Length: 20 EMA Long Period Moving Average: 100 SMA These settings yielded over 200% profit for the backtesting period with almost 60% win rate! Again, you could maximize this even more by utilizing the take profit signals and using short trades when the trend is right and if you are trading on a futures exchange. I have been doing more spot trading on DEXs lately, so I have been trading long only lately. The Importance of Backtesting I cannot stress this enough, you have to back test your strategies to make sure they are going to be profitable. This can be done manually by going back in time on the charts and finding all of your signals and seeing if it was profitable, or you can create your own strategy like this using TradingView's Pinescript and let the program do the backtesting for you. However you do your backtesting, just make sure it gets done! You don't want to just think an indicator or a strategy works, you want to KNOW it works! If not, you could be throwing your money down the drain. This is Only A Test- But Great For Info Gathering I am only using this strategy for my own backtesting purposes, not publishing it. I simply used one part of the strategy that is built into the Logical Trading Indicator, and it honestly doesn't properly utilize multiple options for exits as far as the automated strategy goes. I know that if I use these settings, but also use my built in take profit signals, I can do much better than these results are showing. What is great about this is you can see the performance and find trades that you wouldn't have taken in the first place, or entries and exits that could have been done better by trading manually. For example, after looking at the list of trades, I saw several trades I would have either gotten out of for better profit using the take profit signals, or trades I wouldn't have taken in the first place due to consolidation or accounting for the larger trend. When trying to program some of the other functions from the main indicator, TradingView would freak out on me a bit and not want to provide any results, or results that just didn't make any sense. But that is all a part of the process. It helps you figure out that the machines don't always have it right, and that having just a bit of 'human' in your trades can make your performance even better than the strategy suggests! Living That Trader Life This is the life of a good trader, at least in my opinion. Based on my trading plan, I do not trade on the weekends, even though the crypto markets are open, it isn't always the best time to trade. I like to take this time to go over my trading journal to see where I can improve, perfect my strategies, and hone in on the things I need to work on to get better. What this development work does for me is show me that automated trading is great, but with the combination of a great indicator that can produce trading alerts, and my own trader's intuition, I can give the markets a serious beating and come out with some amazing gains, as long as I stick to the plan, as well as trade manually with the signals! This helps me keep the emotions out of the game and let's me use the data with the correct settings to make the best decisions possible in my trades for the biggest gains! So get out there and do some backtesting on your favorite strategies to see if you really are trading logically!
COINBASE:BTCUSDEducation
by thelogicaldude
Educational: The issue with high risk to reward🔶 Introduction A high win rate—that is, the proportion of trades that result in profits—is appealing to many traders. They might believe that being lucrative requires a high win rate, or that it will increase their self-assurance and lessen their tension. A trader's performance may be negatively impacted over time if they have a high win rate, which is not a guarantee that they will be profitable. We will discuss the problem with high risk to reward and win rates in trading in this publication and why they are not the best measures of success. 🔶 Risk to reward and win rate Two ideas that are frequently used to gauge the effectiveness of a trading system or strategy are the risk to reward ratio and win rate. The risk to reward ratio calculates how much a trader is prepared to lose in exchange for a possible gain. A trader's risk to reward ratio, for instance, is 1:2 if they stake $100 in order to gain $200. The win rate calculates the percentage of trades that a trader wins out of all the trades they place. For instance, a trader's win rate is 80% if they win 80 out of every 100 trades. 🔶 Inverse Relationship between Risk to Reward Ratio and Win Rate One would believe that a successful trader should have a high win rate together with a high risk to reward ratio. This isn't always the case, though. In fact, the risk to reward ratio and win rate have an inverse connection, which means that when one goes up, the other goes down. This is due to the fact that the likelihood of achieving a reward decreases as it increases in potential, and vice versa. For example, if a trader aims for a 10:1 risk to reward ratio, they will have to find a very rare opportunity where they can risk $100 to make $1000, which is unlikely to happen often. On the other hand, if a trader aims for a 1:1 risk to reward ratio, they will have more chances of finding trades where they can risk $100 to make $100, but they will also have to win more than half of their trades to be profitable. 🔶 Importance of Positive Expectation Therefore, unless a trader also has a positive expectation, which is the average amount of money they gain or lose every deal, having a high win rate does not necessarily indicate that they are a profitable trader. The risk to reward ratio is multiplied by the win rate, and the loss rate—which equals 1 less than the win rate—is subtracted to determine the expectation. For instance, a trader's expectation is as follows if they have a 2:1 risk to reward ratio and a 60% win rate: Expectancy = (2 x 0.6) - (1 x 0.4) = 0.8 This indicates that they profit by $0.8 every trade on average. However, if their win rate remains at 60% and their risk to reward ratio falls to 1:1, their anticipation changes to: Expectancy = (1 x 0.6) - (1 x 0.4) = 0.2 This means that on average, they make only $0.2 per trade. As you can see, having a high win rate does not guarantee profitability, unless it is accompanied by a high enough risk to reward ratio. 🔶 The Limitations of High Risk-to-Reward Ratio and Win Rate High win rates can also be problematic because they might make traders overconfident and complacent. They might neglect the risks and uncertainties associated with trading because they believe they have discovered a perfect technique or plan that will always work in their favor. A second possibility is that they grow emotionally attached to their winning streaks and worry about losing them, which can lead them to stray from their trading strategy or take unwarranted risks. Furthermore, a high success rate may make traders more susceptible to cognitive errors like confirmation bias and hindsight bias, which can skew their judgment. 🔶 Conclusion It may not be as desirable as it may seem to have a high risk-to-reward ratio and win rate when trading. It does not necessarily imply that a trader is successful or profitable, and it may also have some negatives that adversely impact their performance. For long-term trading success, traders should pay more attention to other elements than only these indicators, such as expectancy, consistency, risk management, and emotional control.
COINBASE:ETHUSDEducation
by ChristopherDownie
3
⚠️ Risk:Reward & Win-Rate CheatsheetThe reward to risk ratio (RRR, or reward risk ratio) is maybe the most important metric in trading and a trader who understands the RRR can improve his chances of becoming profitable. Basically, the reward risk ratio measures the distance from your entry to your stop loss and your take profit order and then compares the two distances. Traders who understand this connection can quickly see that you neither need an extremely high winrate nor a large reward:risk ratio to make money as a trader. As long as your reward:risk ratio and your historical winrate match, your trading will provide a positive expectancy. 🔷 Calculating the RRR Let’s say the distance between your entry and stop loss is 50 points and the distance between the entry and your take profit is 100 points . Then the reward risk ratio is 2:1 because 100/50 = 2. Reward Risk Ratio Formula RRR = (Take Profit – Entry ) / (Entry – Stop loss) 🔷 Minimum Winrate When you know the reward:risk ratio for your trade, you can easily calculate the minimum required winrate (see formula below). Why is this important? Because if you take trades that have a small RRR you will lose money over the long term, even if you think you find good trades. Minimum Winrate Formula Minimum Winrate = 1 / (1 + Reward:Risk) 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
8
Risk-to-Reward > Win RateWe have mentioned it in a list of our previous educational posts and we will state it again: your risk-reward plan is much more important than your win rate. You can have a 90% win rate and still be losing in the long-run. On the contrary, you only need a 35% win rate to be a consistently profitable trader on the longer term. Beginners mainly focus on winning as many trades as possible and it is totally understandable, because we have all been there. "The more trades I enter, the more money I will make" principle has destroyed many trading careers. The explanation to the "Why?" question is pretty simple: when we are new to trading, every win gives us euphoria and makes us think we are the rulers of the market. Guess what happens next, the market hits back, puts us in a position where we are stuck in a losing streak, and humbles us enough to quit trading and think it does not work. As we get more experienced, we lean towards the "Less is more" principle and believe that quality will always be over quantity. As an instance, we have orchestrated 2 scenarios on the graph. The example on the upper side of the screen shows how our trader has a 80% win rate but has yet failed to remain in profits due to the fact that he does not have a solid risk management plan. On the opposite side of the road, we have Trader B who is able to remain in consistent profits by winning only 20% of the executed transactions. All those minor losses that he made got covered by one big win, and as long as he keeps following the current risk management policy and strategy of his, he is sure that he will be consistently profitable in the long run.
BITSTAMP:BTCUSDEducation
by Investroy
11
Learn Risk-Reward Ratio | Risk Management For Beginners 📚The risk-reward ratio (or risk return ratio) measures how much your potential reward (or return) is, for every dollar you risk. 📚For example: If you have a risk-reward ratio of 1:3, it means you’re risking $1 to potentially make $3. If you have a risk-reward ratio of 1:5, it means you’re risking $1 to potentially make $5. You get my point. ⚠️Now, here’s the biggest lie you’ve been told about the risk reward ratio: “You need a minimum of 1:2 risk reward ratio.” This statement is incorrect! Because the risk-reward ratio is meaningless on its own. 📚Here’s an example: Let’s say you have a risk reward ratio of 1:2 (for every trade you win, you make $2). But, your winning rate is 20%. So out of 10 trades, you have 8 losing trades and 2 winners. Let’s do the math… Total Loss = $1 * 8 = -$8 Total Gain = $2 * 2 = $4 Net loss = -$4 By now I hope you understand the risk reward ratio by itself is a meaningless metric. Instead, you must combine your risk-reward ratio with your winning rate to know whether you’ll make money in the long run (otherwise known as your expectancy). 📍THEREFORE: The key to success is the combination of the RR and Win Rate in such a fashion that yields a positive return. 📙Example: 🔘If your RR is 1:1 then you start making money with 51% win rate and above. 🔘If your RR is 1:1,5 then you start making money with 41% Win rate and above. 🔘If your RR is 1:2 then you start making money with 34% win rate and above. 🔴The higher the RR the lower is the breakeven Win Rate! Like, comment and subscribe to boost your trading! Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
78
CADJPY SHORTlong term down trend on 4H timeframe. Recent tight range broken to the downside, with a strong reversal up to previous support. Now expecting this to act as resistance indicators suggesting an overbought price series and oscillators crossing to the downside for confirmation. Entering positions at support/resistance gives the trader a unique opportunity to be directional with a tight stop loss and setting take profit to support 1, 2 and 3. This results in a favorable risk/reward ratio. Follow for more
Short
by BDPO_Trading
❗️THE BIGGEST LIE ABOUT RISK REWARD RATIO❗️ What is risk-reward ratio — and the biggest lie you’ve been told: 📚The risk-reward ratio (or risk return ratio) measures how much your potential reward (or return) is, for every dollar you risk. 📚For example: If you have a risk-reward ratio of 1:3, it means you’re risking $1 to potentially make $3. If you have a risk-reward ratio of 1:5, it means you’re risking $1 to potentially make $5. You get my point. ⚠️Now, here’s the biggest lie you’ve been told about the risk reward ratio: “You need a minimum of 1:2 risk reward ratio.” This statement is incorrect! Because the risk-reward ratio is meaningless on its own. 📚Here’s an example: Let’s say you have a risk reward ratio of 1:2 (for every trade you win, you make $2). But, your winning rate is 20%. So out of 10 trades, you have 8 losing trades and 2 winners. Let’s do the math… Total Loss = $1 * 8 = -$8 Total Gain = $2 * 2 = $4 Net loss = -$4 By now I hope you understand the risk reward ratio by itself is a meaningless metric. Instead, you must combine your risk-reward ratio with your winning rate to know whether you’ll make money in the long run (otherwise known as your expectancy). 📍THEREFORE: The key to success is the combination of the RR and Win Rate in such a fashion that yields a positive return. 📙Example: 🔘If your RR is 1:1 then you start making money with 51% win rate and above. 🔘If your RR is 1:1,5 then you start making money with 41% Win rate and above. 🔘If your RR is 1:2 then you start making money with 34% win rate and above. 🔴The higher the RR the lower is the breakeven Win Rate! Hope You get the idea, guys. Thanks for your time, see you in the next article😉
BITSTAMP:BTCUSDEducation
by SignalProvider
4
Risk:Reward Ratio. What is it?Risk to reward ratio. What is it? What does it mean and how do we use it? Now, if you made it to the point where you're here on TradingView, there's a good chance that you have heard about Risk to Reward ratio. Today, I want to dive into what it really means and how to actually utilize it. I see so many beginners missing out on huge profits and opportunities because of their risk reward ratio and I want to share my knowledge of this tool and how to actually use it in the future. Firstly, let's dive into what is the risk/reward ratio? The RR ratio is a tool that can accurately predict by expected returns based off of previous results. This tool measures how much reward you are estimated to gain based off of the dollar amount you risk. For example, if you have a risk to reward ratio of 1:3, it means for every $1 you risk, you will gain a return of $3 in the event of a positive trade. Using the same example in the FX market, let's say you're risking 10 pips on EURUSD, your take profit is at 30 pips. This means you gain 30 pips in the event of a win, lose 10 pips in the event of a loss, giving you a 1:3 risk/reward ratio. This is a very powerful tool because compared with the win rate and in correlation, you can actually predict based off of your previous results, you're expected returns on investment. Being able to predict what you're expected returns are are great way of giving you milestone targets, but also when you're looking at getting funded with prop firms, you also know what you are actually able to achieve in what time frame. Now, it goes without saying, the higher your risk to reward ratio, the less you need to win in order to maintain profitability. The opposite, the lower your risk reward ratio, the higher win rate is required to maintain profitability. But this is where we get into where I find beginners struggle. A lot of people will base their strategies on their risk/reward ratios, which is understandable if you're building the strategy from scratch. If you're using a prebuilt strategy or something that doesn't really correlate with risk/reward ratio. Then it makes it obsolete and just confusing. Going back to my first point, risk to reward ratio is a tool that you can use to estimate future potential returns based off of previous results. Let's say you have 100 trades worth of data. You can accurately have a look at what is your risk to reward ratio is and compare that with your win rate. From there you can make a decision whether or not that is a profitable strategy. On top of that, you can then start to look to improve either your win rate and risk to reward ratio, knowing that that is an area that needs improvement. When it comes to improving your risk to reward ratio, one thing that always grinds my gears with traders, is when they enter a trade, they'll set their stop loss and take profits based on their risk to reward ratio not based on the actual analytics of the trade. While I understand this and with some strategies, this can work. For most, they end up setting those take profits in areas that is just realistically is going to be really hard for the price to get to. What professionals do when trying to improve the risks of reward ratio is only take those setups where a good take profit is viable around that level of risk to reward. For example, in this chart, we are looking at buying the USDCAD over the next couple of weeks. We like this setup. We've had our entry signal and we're going to place a stop loss below that recent low, which was created early last week. We are not happy with our risk to reward ratio. We think we're leaving too much profit on the table and want to increase our overall results. So I'm only taking trades that have close to a three to one risk to reward ratio. But as you can see by this chart that dotted lines are areas of resistance which we are going to have to break in order to achieve that level of profitability. There are 5 different zones we are going to have to get through in order for my take profit to be hit, it is fair to say the odds are not in my favor. Now a beginner Trader will still enter this trade with the same take profit and the same stop loss and just hold on. The reason they'll do that is because they want the 1:3 risk reward ratio. They don't care where the profit target is. What matters is it is 3 times worth what they're risking. On the other hand, A professional trader will actually either let this trade go and not enter it, or look for another entry point later on on smaller timeframes to where you can fit that risk to reward ratio and you're not going to hit the high levels of resistance. To sum up what my point is, risk to reward ratio is a very powerful tool to understand what you are capable of the trader and also where you can improve. It is not a valid take profit selection strategy. Yes, it can definitely help with guidelines on where to set your take profit, but it should not be the sole reason your take profit is set at a certain price just because it is X amount whatever you are risking. Have a look at what the chart is telling you and what your analysis is telling you. Then, only take the trades which coincide with the risk to reward ratio. You want to achieve. I hope you enjoyed this insight and I hope it was beneficial to you. I recommend highly diving into your previous trading data. Have a look at your win rate. Have a look at your risk reward ratio and understand what your profitability expectation really is and base your future decisions off of that data. Have a fantastic trading we can I look forward to seeing your comments. - Jordon
FOREXCOM:XAUUSDEducation
by the5erstrading
5
Top & Bottom Indicator with KDJ ConfirmationSimple Top & Bottom Indicator with confluence of the KDJ Indicator! Long Entry Example: -Background Switched from red to blue -Buy Label Printed -KDJ close above 50 Short Entry Example -Background Switched from blue to red -Sell Label Printed -KDJ close below 50 SL Placement: -Last Bullish/Bearish Candle of previous opposite chart background. Risk to Reward: 1:2 (recommended) 1.1.5 (higher Winrate) I coded it into a Strategy. Suitable for the 1min Chart.
Long
by EtherMatt
2
Winning rate (Course #1)The goal of this page is that you understand winning rate and how it works. Your win rate is how many trades are winning trades out of all the trades. This is fairly easy and straightforward. Did you know that you don’t need to win 100% of the time? As a matter of a fact, I found that algos with a VERY HIGH win rate (98-99%) are the worse ones, because the 1-2 % of losing trades represent a loss that is usually equal or bigger than all the gains altogether. See below one of my very first profitable algo. I never got that major loss with this algo, but I knew it would come. I got lucky because I stopped the algo right before a big move against me, which would have caused a liquidation event (similar to what happened to me with the PSAR bot from Swing Trade Pros, see the introduction post). This is basically 769 trades with no loss whatsoever. June July Mid August 2021. This is great right? Yes, but I never slept well because I knew my strategy had a flaw and I could get liquidated at anytime. This algo is one of the algo I run side by side with my hands free algo. I just turn it off when I know that I am at risk of being liquidated. Or, I turn it on when I am rather confident of the direction of the market overall. So what is the point of having a 99% win rate if the 1% loss can erase the 99% profits? In reality you will find that most traders or strategies varies between 25% and 45% win rate. You might think how come you can be profitable if you win only 25% of the time? Hang on I will prove it to you below. My best strategy has a 45% win rate approximately. I have great strategies with 25% win rate also. Most manual traders (no algo) are at about 30 to 35% win rate. Some of these guys on Twitter (very rare) have over 50% win rates, same as Market Cipher Crypto Face, he’s got a higher than 50% win rate I think. He is a very good trader, and this is why he’s very wealthy, because he knows how to manually trade. This benchmark should give you a good idea of what to expect. Another thing – the higher the time frame you use, the higher your win rate. For example, Bitcoin has a tendency to go up only – at least on the macro level, let’s say on the daily time frame. So right there you have what we call an edge, this is an advantage over the market. The advantage is a higher probability to go up than to go down. Because of that, you can easily develop an EMA crossover strategy that will win more than 50% of the time! EASY! Now if you trade on the 5 min timeframe, you literally have a 50% chance for the price to go in either direction. You can try to play the trends here and there, check the momentum, whatever, but if you have traded Bitcoin for long enough, you should know as much as me that ANYTHING can happen at ANYTIME – and even if you were over the 200 EMA, even if Market Cipher showed a bullish divergence and even if you were at a major horizontal support, ANYONE can dump the market (e.g. a whale – or Elon tweeting) and go against all the odds. Because anything can happen, it is much harder to have a really high win rate. So how can you make money if you win only 30% of the time? Check out the example : out of 10 trades, only 3 of them are in profit (3/10 = 30%) Does the order of the trades change the final profit? I shuffled the order of the trades – we can see that it doesn’t matter whether you have a losing strike or more losses before the wins, the results at the end is totally the same. So YES you can make money and lose the majority of the time. It doesn’t take anyone a Master’s degree to understand that this is due to the relative size of the wins to the losses. This also introduces the concept of R multiple, which I cover in Tutorial 5. Take a look below at the 10% win rate strategy. Personally I would love to have this strategy with a 10% win rate! Imagine this is 1 day worth of trades, you end up making 2.314% ! If you do this everyday, you can almost double your money in 1 month! This is true! This is also because of compounding, which I will cover in Tutorial 2. On this example, you can see the winner in relation to the losses, is much larger. 12% win is 12 times bigger than the average loss. What if I don’t compound at each trade? Well in this case, you would get 3% return overall. Before I jump into the conclusion, I want to talk about my 99% win rate strategy. Now that we have covered some examples, thing about a strategy that has a 1% win rate? QFL Luc is a great trader and in one of his videos, he talks about this guy who basically has a trading system with almost a 1% win rate. The thing is, each losses is super small. But 1 time out of 100, he gets right at a bottom or a top, and the trade goes in his favor, and he makes a huge gain, which covers for all his losses! Cool right! Conclusion: Most algos and manual traders have win rates in the 30-40% range. The profitability is the result of the size of my winners as compared to the size of my losers. “Keep your losses small and let your winners run”.
Education
by Maddrix_club
Bitcoin Roadmap Chapter 3Since Dec 16, 2021 , I have 75% win rate on my analysis! (I'll mention a few public ideas in related ideas part) . But past analysis CAN NOT grantee this one. So be aware it is just an idea ! As I mentioned in the last idea , red harmonic is just a possibility for a bearish Max Gartley pattern. We are to see the stop loss hunt scenario and that's the point I get in! Also the 50 weekly Moving Average is a strong resistance for the asset , so take care of this one more than anything! On the right side you can see the volume profile for last 380 candles , this shows we have resistance about 48000 , don't be surprised if I tell you the 50 weekly MA is also 48000 😀 Follow this Idea so you can be notified for the updates I'll post. GOOD LUCK
INDEX:BTCUSD
by JavadisHere
1
Beating the rake - Know your trading feesLet’s talk about trading fees. This is an area that most people who trade don’t put enough thought into, but it can make a huge difference to your bottom line. This is especially the case when dealing with percentage based commissions in combination with leverage. Many people, especially those who mainly trade crypto, will be using services that charge percentage based commissions, with fees that can be as high as 0.5% ! But even if you’re trading at one of the more trader-friendly exchanges you’re likely to be paying in the region of 0.1% taker fees for spot trading and 0.04 - 0.06 % taker fees on futures. That sounds pretty cheap, right? 0.06% fee on a trade sounds almost negligible, which is why most casual traders don’t pay too much attention to it. Firstly though, you need to remember that this is the fee for both buying and selling, so for a round trip (buy and sell, assuming taker fee of 0.06% for each) you’re paying 0.12% Suddenly that starts to look a bit more significant, especially for short term intraday traders and scalpers. Let’s take a quick example. Let’s say you’re an intraday trader paying 0.06% taker fees on futures, and your typical Risk/Reward is aiming for a 1% gain and a 0.5% loss for an R of 2. The breakeven rate with an R of 2 is a 33.33% win rate, which is why many traders aim to trade this way. If they can achieve a win rate in the region of 50% they can be highly successful. But then we take your trading fees into account. That 1% average win becomes 0.88 % after your 0.12% round trip of taker fees. And your 0.5% average loss becomes 0.62 % after your round trip to fee-town. So now with an average win of 0.88% and average loss of 0.62% your R is down to 1.42! That means your breakeven win rate has changed from 33.33% to 41.33%! What if you’re aiming to catch even smaller percentage moves? If you were aiming for 0.5% average wins and 0.25% average losses for Risk/Reward of 2, but without considering fees, you might be in for a nasty surprise. Your average win would now be 0.38% and your average loss would be 0.37% after accounting for 0.12% round trip fees on all trades. The 2 R you were aiming for to require a 33.33% win rate actually becomes 1.02 R, requiring a 49.33% win rate to break even! And as a last example, let’s say you take a different approach. Perhaps you’re the type of trader aiming to take equal sized wins and losses but aiming for a 60 - 70% win rate to make your money. At 1% average win and loss (1 R), your wins become 0.88% and your losses become 1.12% after fees. Instead of a 50% break even rate you now require a 56% win rate just to break even! And if you aim for 0.5% average win and loss (1 R) your average wins become 0.38% and your losses become 0.62% after fees, requiring a 62% win rate to break even! Can you overcome those odds? The key takeaway here is that factoring trading fees into your trading plan is absolutely vital to understanding your risk/reward. The smaller the trading fees are as a percentage of your average trade, the less impactful the fees will be on your bottom line. To keep your trading fees small as a percentage of your average wins and losses, the simplest way is obviously to trade for larger average wins and losses, taking a swing trading approach with smaller position sizing. Alternatively, most exchanges/brokers will offer cheaper trading fees for “makers” using limit orders, as opposed to “takers” using market prices. This discount for maker fees will usually slash your fees by 50% - 80%. Many will also offer additional discounts for using a specific token for paying fees (e.g. BNB or KCS) or various discounts for VIP levels/tiers. Do not underestimate the value of these discounts, they can have a very substantial impact on your bottom line, especially if you are a short term intraday trader or scalper. Just a 50% saving on fees could be enough to turn a short term trader from a breakeven trader to a winning one.
BINANCE:BTCUSD.PEducation
by HayeTrading
1