fbpx

How you can have a 99% WIN RATE and STILL LOSE MONEY

The biggest but most meaningless metric you will see on YouTube is “win rate”. How this trading system has a 40% win rate, so it must be bad, while the other algorithmic trading system has a 90% win rate, so it must be good. Win rate, does not tell you whether the system will make or lose money. Win rate is a simple metric, where if you take 10 trades, and 5 result in profit, you have a 50% win rate.

Let’s look at an example of a system with a 99% win rate that loses money. A common system to produce this result would be one where the profit target is set very close, and the stop loss very far. Let’s say we have a $10 Profit Target, and a $1500 dollar stop loss.

Trade 1 – $10 WIN

Trade 2 – $10 WIN

Trade 2 – $10 WIN

Trade 99 – $10 WIN

Trade 100 – $1500 LOSS

WIN RATE 99%

NET P/L ($510) LOSS

The metric you should be concerned about is Expectancy. Expectancy is the expected return per trade. Only systems with a POSITIVE EXPECTANCY should be traded. A system with a negative expectancy simply means you will lose money or have an expected negative return per trade.

Let’s calculate the expectancy of this system

Expectancy Formula = (Win% X Avg Win) – (Loss% x Avg Loss)

(.99 x 10) – (.01 x 1500)

(9.9) – (15)

Expectancy = -5.1

The expectancy of the above system is NEGATIVE 5.1 and should not be traded.

The Trading Futures Now 100% automated trading and 100% automated scalping algorithm can help you take the mystery out of automated futures trading.  We encourage all our TFN users to test their systems on a wide period of historical data to fully understand the strategy in various market conditions.  Sign up for the Trading Futures Now 100% automated trading algorithm for NinjaTrader on our website.

Types of Futures

Futures are a good option for hedging and speculation purposes. With a futures contract, the buyer and seller enter into an agreement with an agreed-upon price and date of expiration. Once the date of expiration has passed, the buyer has to trade at the price that has been previously...

Continue reading

Risk Disclaimer :

There is a very high degree of risk involved in trading. past performance is not necessarily indicative of future results. TFN Trading Corp and all individuals affiliated with this site assume no responsibility for your trading and investment results. All the material contained herein is believed to be correct, however, TFN Trading Corp will not be held responsible for accidental oversights, typos, or incorrect information from sources that generate fundamental and technical information. Futures and futures options trading carries significant risk. Options trading carries significant risk. Foreign Exchange trading carries significant risk. Stock Trading carries significant risk. Trading securities, security options, futures and/or futures options is not for every investor, and only risk capital should be used. You are responsible for understanding the risk involved with trading futures, options, stocks, and foreign exchange products. prior to trading any securities products, please read the characteristics and risks of standardized options and the risk disclosure for futures and options. The strategies, setups, methods, and all other products and features on this website are for educational purposes only and should not be construed as advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness, and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of TFN Trading Corp may have a position or affect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. All our partners or affiliated companies are in no way associated with the proprietary information provided by the TFN Trading Corp method or software. All returns are based on buy side analysis and do not include commission costs. All projections are based on current returns. the projections do not account for any possible draw down effects on performance and performance projections. Actual returns and projected returns may fluctuate over the course of the service. Any person who chooses to use this information as a basis for their trading assumes all the liability and risk for themselves and hereby and absolutely agrees to indemnify and hold harmless TFN Trading Corp, its principals, agents, and employees.

Testimonials Disclaimer :

Testimonials appearing on tradingfuturesnow.com and or all affiliated websites may not be representative of the experience of other clients, users, customers and is not a guarantee of future performance or success.

NINJATRADER® is a registered trademark of NinjaTrader® Group, LLC. No NinjaTrader® company has any affiliation with the owner, developer, or provider of the products or services described herein, or any interest, ownership or otherwise, in any such productor service, or endorses, recommends, or approves any such product or service.

CFTC RULES 4.41 – Hypothetical or simulated performance results have certain limitations; unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses like those shown.

Copyright ©2024 TFN Trading Corp. | All Rights Reserved

Log in with your credentials

or    

Forgot your details?

Create Account