A high win rate attracts many traders like a halo, but it is often a gentle trap. Those who pursue a high win rate often gain small profits when winning and suffer heavy losses when losing. This mode of winning little and losing much leaves wealth hanging by a thread.
For example, a trader raises their win rate to 90% through skill, attracting envy. But an extreme market event, like a tsunami, can wipe out their account, leaving both profits and capital gone, and the account at zero. The high win rate collapses instantly in the face of reality.
The core secret of low win rate profitability - strategy.
Increase positions with the trend to maximize profits.
Traders decisively increase positions when the market is favorable. They understand that correct market conditions must be seized to let profits run; a single profitable trade can cover multiple losses.
Stop loss in a timely manner, cut losses to survive.
Once the direction is wrong, they never hesitate and immediately stop loss. Instead of holding onto losses, it is better to stop loss in time to leave capital and opportunities for the next trade.
The key to trading: profit-loss ratio greater than win rate.
A low win rate is not scary; a low profit-loss ratio is deadly. Some traders have a win rate of only 40%, but their return on profits is more than ten times the losses, tripling their account value in a year. Trading is not like a game of who wins more; it's more like war, allowing failure but not total defeat. As long as the profit-loss ratio is high, a few correct trades can reverse the situation.
Abandon four major thinking pitfalls.
High win rate ≠ expert: The market is complex, and no one can be right forever; one cannot ignore risks due to a high win rate.
Don't cling to battles, stop loss in a timely manner: Losses are like snowballs, the longer you drag them, the bigger they get. Once an error is found, stop loss decisively.
Increase positions when profitable and secure the victory: When encountering good market conditions, don't be timid; double down on profitable trades and let profits run.
Value the profit-loss ratio: A high win rate is an illusion; the profit-loss ratio is the key to trading success or failure.
The method of achieving financial freedom with a low win rate.
Stop loss quickly: If something is wrong, decisively cut the position and preserve capital for new opportunities.
Increase position when profitable: When the trade is correct and profitable, decisively increase the position to maximize profits.
Accept failure: Trading is not about pursuing perfection; treat failures as tuition and keep improving.
Develop a profit-loss ratio strategy: Combine your own style with the market to create a personalized profit-loss ratio strategy.
In trading, pursuing a high win rate can easily lead to pitfalls and be harvested by the market. The real winners accept failures and focus on the profit-loss ratio, being 'low win rate' experts. Seizing one correct opportunity can turn things around.