Loosing 9 out of 10 times and still make money.Possible?

[rohitsx]

I heard that great traders can afford to loose 9 out of 10 times and still make money .Infact even at this pathetic strike rate , they still can make 100 % compounded annual returns ,year after year . Difficult to believe isnt it . I guess thats why they are legends ?

guys , pls give some inputs on how this is possible ?

 

[nac]

Yeah, it's possible...

I can give you an example.

How a trader makes 100% yearly return, with a success ratio of just 10%?

When he risks 1% with the pay off ratio of 13:1 i.e., every Rs. 13 you make, you lose Re. 1/-

PS: Assuming 240 trading days a year.

 

[Smart_trade]

Yeah, it's possible...

I can give you an example.

How a trader makes 100% yearly return, with a success ratio of just 10%?

When he risks 1% with the pay off ratio of 13:1 i.e., every Rs. 13 you make, you lose Re. 1/-

PS: Assuming 240 trading days a year.

For every Rs 13 you make you loose Rs 9 and not 1 as mentioned by you because 9 trades out of 10 are loosers.

Smart_trade

 

[TraderRavi]

sab bakwas hai , why he is trading if loosing 9 out of 10.........:annoyed:

 

[Smart_trade]

I heard that great traders can afford to loose 9 out of 10 times and still make money .Infact even at this pathetic strike rate , they still can make 100 % compounded annual returns ,year after year . Difficult to believe isnt it . I guess thats why they are legends ?

guys , pls give some inputs on how this is possible ?

Great traders dont loose on 9 out of 10 trades. It is psychologically very difficult to trade a system which gives 9 loosers out of 10 and the 10 th trade has to be a multibagger. Will that 10th trade make 12 or 13 R ?

Good traders have about 45-65 % winning trades and the win/loss ratio is over 2:1 preferably 3:1 and above.That is enough to give a great edge to them.

Smart_trade

 

[nac]

For every Rs 13 you make you loose Rs 9 and not 1 as mentioned by you because 9 trades out of 10 are loosers.

Smarty,

Pay off ratio 13:1 means that every 13 rupee you win, you lose 1 rupee. That 9 to 10 I called is success ratio (win ratio) i.e., 10% in this case. And my calculation is correct, I cross checked.

 

[Smart_trade]

Smarty,

Pay off ratio 13:1 means that every 13 rupee you win, you lose 1 rupee. That 9 to 10 I called is success ratio (win ratio) i.e., 10% in this case. And my calculation is correct, I cross checked.

nac,

I am quoting from a MM article and Pay off Ratio is defined as under :

...........and r is the ratio of average winning trade to average losing trade, also know as the payoff ratio.

If you accept this defination of Pay Off ratio then please do your calculations again. If you have some other meaning of Pay off Ratio, then we are on different page....the basic assumption is wrong.

ST

 

[rohitsx]

sab bakwas hai , why he is trading if loosing 9 out of 10.........:annoyed:

are bhai , i am saying even in the worst case scenario also they can turn profitable .

 

[rohitsx]

Great traders dont loose on 9 out of 10 trades. It is psychologically very difficult to trade a system which gives 9 loosers out of 10 and the 10 th trade has to be a multibagger. Will that 10th trade make 12 or 13 R ?

Good traders have about 45-65 % winning trades and the win/loss ratio is over 2:1 preferably 3:1 and above.That is enough to give a great edge to them.

Smart_trade

i know that it is psychologically difficult to continue trading after a few consecutive loosing trades . But that is the edge some legendary traders have , remember what dennis richards said , 95 % of his profits has come in 5 % of his trades , if that is the case his system strike rate was even lower .But still they traded such systems and become legends.

 

[nac]

I am quoting from a MM article and Pay off Ratio is defined as under :

...........and r is the ratio of average winning trade to average losing trade, also know as the payoff ratio.

If you accept this defination of Pay Off ratio then please do your calculations again. If you have some other meaning of Pay off Ratio, then we are on different page....the basic assumption is wrong.

I think you have misunderstood the term.