It absolutely doesn’t matter. In fact, it’s one of the less important statistics to make trading profitable.
This is contrary to what you think because you need to be accurate and right to make money. That’s what school teaches us to do. For example, my trades are 50% right and 50% wrong, but when I’m right, I make 10 times what I risk and when I’m wrong, I lose one times what I risk. I am extremely profitable, right?
For my second example, let’s say I’m 99% accurate. 99% of my trades are winners and 1% are losers. If I make 1% on every trade that I win and I lose 100% percent on the trade that I lose, how well do I do?
The key is understanding expectancy, which is sort of the mathematical equation of trading. Your expected profit on each trade is equal to the size of your winning trades times the percentage of trades that you win, minus the size of your losing trades times the percentage of trades that you lose.
You can make money as long as that formula is profitable and if you have a high winning percent, but small winners and big losers could lose you money. If you have a low winning percent, but very big winners and small losers, you can make a lot of money.
How do I perform on accuracy win rate? I have some systems or sets of rules that are right 30% of the time but the winners are big and the losers are small. The math of it works out to be very attractive.
I have other systems that are right 70% to 80% of the time and the winners are moderately big and losers are a bit bigger. Because when you’re very accurate, you tend to have bigger losing trades generally. But the math of that also works out pretty attractively. You can make money across this whole spectrum as long as the size of the wins and the size of the losses is in the right proportions.
If you’re using advisory services, someone else is trading for you, or there’s a trading robot that you’re looking at buying; when they promote 90% accurate trading robot or 85% accurate trade picks, what they’re not saying is how much money they lose when they’re wrong. What these trade advisors will do is they’ll run their system or their services and when they have a really big winning streak, they’ll say, “Look, we had 85% winners. Buy our super accurate trade call services. It only costs $5,000 a year to subscribe.”
And when they have a losing streak, you won’t hear from them from a little while. When they have a winning streak, they’ll start marketing again. What I would encourage you to do is insist on seeing the full story. I would never trade on the advice of a newsletter unless I could see every single trade call they ever made; may it be good, bad and ugly. This is absolutely what happens in the financial industry.
Take back control for your own trading, get your own objective rules, test them and eliminate the need to worry about that stuff. You will find yourself in a much more sustainable position, because someone can say, “Hey here this is the best indicator in the world.” You can say, “Good. Tell me about it then I’ll go and test it and I’ll see if it actually works on my markets for me.” And if it does great, you can use it. If it doesn’t, throw it away. It’s about being empowered to be able to test and take control. Test the idea, see if it’s profitable, take control of trading yourself.