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Winning % is one of the least important statistics, yet it is considered
very important. This mind set keeps people from trading correctly, cut
losses short relative to your time frame, let winners run relative to your
time frame. The quickest way to increase W% is to take profits more quickly
and to give losers more room. The drawdown issue is incorrect as well.
High W% systems will have fewer drawdowns, but they will be severe. Look at
option selling, a very high W% strategy. Many many small winners vs. rare
large losers. During those large losers, one experiences large drawdowns.
Of course if one can have a high W% and a favorable Avg. W to Avg. L ratio,
then one has the best of all worlds. However, that is EXTREMELY rare. In
fact I can not think of a single trader who has maintained such a public
record for more a significant amount of time, 10 years or more, in actual
trading. Most of the well known large money managers win <40% of their
trades.
sb
----- Original Message -----
From: hans esser <he96@xxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, November 19, 1999 10:01 AM
Subject: [realtraders] CL_Evaluating & Optimizing systems {01}
>
> "Gary Fritz" posted some great comments about system perfomance and:
>
> > % wins: Obviously, the higher the better. Higher-% systems are
> > psychologically easier to trade, and they also have much less risk of
> > serious drawdown. (You're less likely to string together a really long
> > series of losers.) You can make a very profitable system with 50%
> > winners, but I prefer 60% or higher.
>
> I think thats a very difficult and dangerous number. While you are right
about
> the PSYCHOLOGICAL effects of "having a winner or a looser", the bottom
> line is the $ results over all.
>
> It is very easy to have a high% profitable system, e.g. use stops higher
than
> profit targest or exit on first profitable opening (only <g>).
>
> I have seen very high% number systems that collapsed and have seen lots of
> longer term good stuff with only 30-40% winners.
>
> Bottom line - I think THIS number is the least important of all you
mentioned
> BUT widely overestimated and marketed !
>
> thanks
> rgds hans
>
>
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