29 Jan Is An 89% Win Rate Good Enough?
Is An 89% Win Rate Good Enough?
Jan. 29, 2024
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We’ve heard it over and over again:
High win rates don’t matter.
A high win rate means the system is a scam.
And a lot of the time, both of those are true.
But the most important thing of all is staying in the game.
We shouldn’t pick the “best” system. We shouldn’t pick the most profitable system.
We should pick the system we’d actually do.
Likewise, we know we should budget our finances. It’s the best way to grow our money. But if we don’t do it–if we don’t want to do it–that tip is worthless.
And we know we should follow trends and win only 20-30% of the time with massively high reward to risk ratios. It’s the most tested way to grow our accounts. But if we don’t do it, systems like that are worthless.
The system that makes us rich is the system we’ll actually do. And what makes us want to do it?
A high win rate.
Which means a hugely negative reward to risk ratio.
To that end, let’s take a look at a Buy on Monday system for the E-Mini Nasdaq during regular trading hours (NQ.D).
It’s eerily similar to the ES system we looked at last week. Here are the guidelines:
The Buy on Monday NQ.D System
- Buy on Monday after 1 pm ET.
- Close out at the same time as entry on Wednesday if we haven’t hit our target.
- Target is 17x less than the stop (a little more than index funders but you can’t get too much of a good thing).
- Use ATR for target and stop so that we adjust to volatility over time.
That seems pretty random. Why buy on Monday? Why not any other day? And why not just buy-and-hold?
Well, the answer to the last question is obvious. We don’t buy-and-hold because doing that would never get us this:
That’s hypothetically trading 1 lot each time from 2001-2024. Here’s the Report:
It makes a lot of hypothetical profit and the win rate is right around 89%.
Will that 89% keep us in the game? Even when our full stoploss is hit?
If the answer is yes, then this is one of the best systems I’ve seen in years.
If not, then it’s back to trend following, of course.
In our next Newsletter, we’ll see if we can make this system better.
Talk to you soon.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY 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 PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.