64% winrate, but I failed my prop challenge - page 2
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People seem to not understand that a high win rate does not mean that a trading system is profitable in the long run...
Some people, yes.
Here comes "broken record" me, repeating this... Let's say that a single position swing trading strategy, on average, only wins 1 of every 5 trades. But its average winner is 7 x the amount of its average loser. There are merely 4 losers to cover in this scenario, so that 5th little 7x haymaker more than covers those 4 losses. This only reinforces the importance of statistical analysis in formulating a strategy.
TBH, I presently run a scalping EA with a 57/58% win rate for longs/shorts, respectively, but there is so much more involved to refine it. It's always nice to start out strategic design with a high win rate, or profit factor for that matter, but neither of those stats are determinative on a standalone basis.Alex is right that the breach rule matters more than the win rate.
What usually ends a challenge is the daily loss limit meeting a losing streak. At 64% wins, five losses in a row is something to expect over a few hundred trades, and with several trades on one day a cluster of losses isn’t unusual. If each loss is 1% and the daily limit is 5%, one bad Tuesday is enough.
So I’d work backwards from the rule: take the longest losing streak in your own history (not the average), multiply it by the risk per trade and keep that below the daily limit with some room for spread and slippage. A cap on trades per day helps too.
That usually changes the outcome more than moving the win rate from 64% to 70%.
Eduardo
What if you trade at the wrong time?
So, I was trying to pass my first prop-firm challenge.
My trading system was actually pretty decent giving me 64% winrate with RR 1/3.
But I lost my challenge. I didn't know why because my live broker account gave me +9.13% of profit monthly.
Most of my trades were on Tuesday (6 trades), Thursday (3) and Friday(2). (that's the thing).
SO... I HAD THIS PROBLEM ALL THE TIME IN MY TRADING HISTORY.
My trading strategy before prop-challege had 27 trades opened on Tuesday with -6% total result. (only 28% winrate). For me it was like: Why does it even matter? The market had right conditions to open a trade. I still have no answer, but I just know that when I don't open trades on Tuesday, my results are better. I failed the challenge but my own account gave like +11% of profit in October.
Anyone else notice specific days are just cursed for them?
People seem to not understand that a high win rate does not mean that a trading system is profitable in the long run..
Anybody chasing high win rates and that can't understand the winning mechanics of long term Forex trading deserve what they get , Take the OP ,that type of outlook is a non stop loop of fails long term .
My trading system was actually pretty decent giving me 64% winrate with RR 1/3.
One more thing... A risk/reward ratio of 1 to 3 inherently means that your stoploss is 3x as likely to be struck by price as your takeprofit.
If I placed horse A and horse B at the same starting line, set a finish line at 100 meters for horse A, set a finish line at 300 meters for horse B, and you had no intel on either horse, which horse would you put your money on?
To avoid that scenario, I use a dynamic exit. As a safety, I also put a server-side stoploss a "red bus" away from my entry price─as "insurance" for any potential power outage, internet outage, pc crash, MT5 crash, etc. on my end.
On a more general note, you should have a specific reason for exiting when you do─as opposed to an arbitrary RR ratio, unless that RR ration has been statistically deduced in testing. This is where algorithmic trading has an obvious advantage which is the ability to efficiently test.