How to calculate the breakeven win rate for a trader | Anup Thacker posted on the topic | LinkedIn (2024)

The one formula to guarantee your trading success I'm talking about:The Positive Expectancy FormulaIt’s a myth that you need a high win rate to be a profitable trader.You can have a 99% win rate but that 1% could be such a big losing trade it could bankrupt your portfolio.That’s why you need the Positive Expectancy Formula.I first came across this concept through one of the world’s most popular trading books called “Trade Your Way to Financial Freedom” by Van Tharp.He explained in one line that the expectancy is the amount you stand to gain (or lose) for each rand you risk.And that when you calculate the expectancy, the result will need to be positive to ensure you have a successful trading strategy. Expectancy Formula: What you need to succeed as a trader Here are four values you’ll need to calculate your expectancy. Value #1: Your average winning trade (Rands) (AW)Value #2: Your winning percentage on all of your trades (win rate)Value #3: Your average losing trade (Rands) (AL)Value #4: Your losing percentage on all of your trades (losing rate) Once you have those four values then you can plug them into the Positive Expectancy Formula:Positive expectancy= (AW X Win rate) - (AL X Losing rate)You’ll need to have at least 30 trades back-tested or forward tested to show an accurate result of the expectancy of your trading strategy. And if you have a positive number in your expectancy over that set of data, you’re bound to have a successful strategy which will bring you consistent income.Let’s use my Red Hot Storm Trader service’s results over the past six years, so you can see whether it has a positive expectancy.We’ll use an average trader’s portfolio of R10,000. Average winning trade = R400Win rate = 62% Average losing trade = R400Losing rate = 38% We simply plug in those values into the Positive Expectancy Formula… Expectancy= (AW X Win rate) - (AL X Losing rate) = (R400 X 62%) - (R200 X 38%) = R248 – R76 = R172 We have a Positive Expectancy, which means the strategy should remain profitable in the future.If you have a portfolio of R10,000, you can expect to earn R172 per trade.And after 100 trades, you should bank R17,200.However, it’s all relative to the portfolio you have. Say you have a portfolio value of R100,000.After 100 trades you’d bank up to R172,000.The bottom line is:When you use the Positive Expectancy Formula, the result must be positive if you want to make a profit over time.Never use a system with a zero or negative expectancy. You will not win.#tradingformula #tradingstrategy #stocktips #tradingtips #tradinglessons #JSE #ALSI #stocklessons

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If you want to make 2024 YOUR best trading year, I have the 9 most important trading principles for you:1. Don´t system-hop:System-hopping refers to constantly changing one´s trading strategy, hoping to just find a trading approach that will somehow only produce winning trades without any failures.Of course, such an approach is futile. You do not just “stumble over” a profitable trading strategy that you turn on and it won´t stop printing money.The best trading strategy won´t help you make money if you haven’t developed the traits a professional trader needs. Some of those traits we are going to explore in the next points on this list. But you must internalize this thought!2. Learn position sizing:When traders “blow their trading account” they have usually violated important risk management principles. With proper position sizing, it should be nearly impossible to lose your whole trading capital. A trader must learn how to size a position to achieve a constant risk level per trade. Mostly, traders opt for 1% or 2% per trade – meaning they risk 1% of their whole trading capital per single trade. Being able to size your trades correctly is a key skill of any aspiring trader. You don’t want to be a gambler!3. Have an exit plan for every trade:Before you get into a trade, know where you want to get out. Pick a stop loss level and ask yourself what must happen that would cause you to exit your trade. Traders who don’t have an exit plan will often let losses get out of hand and start trading emotionally.4. A trade is more than just an entry :To improve your consistency, you need to have a consistent trading approach. Amateur traders often jump around and trade impulsively. This inevitably leads to impulsive trading results and causes a lot of stress in their trading.One thing that will make your trading so much easier and reduce stress is to have clear rules for your entry, exit, take profit, stop loss, and trade management. The clearer you are on how you respond to different trading situations, the more confident you will be in your trading. Take a look at your trading plan and make sure that you have well-defined trading rules in place.5. Analyze your trading every week:The best traders learn from their trading history. By reviewing past trades, you can learn from your mistakes and find out what to avoid. You can always find ways to improve your underperforming trades to boost your overall trading performance. I recommend going over your last week´s trading activity during the weekend. Try to find one thing every week that you could have done better and want to focus on next week. Over time, you will be able to transform your trading by making small and consistent improvements.

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There are several important steps that every trader must adapt, let’s break them one by one:Building a Successful Forex Trading Plan1. Do your homework before you begin tradingBegin your preparation before the market opens, learn what is going on in other markets around the world.2. Skill AssessmentSelf-awareness of your trading skills. Are you ready to trade the market? Do you feel confident in understanding the market?The experienced forex portfolio managers are always prepared. you must have a clear set plan, so you’ll not throw your money away.3. Set Risk LevelKnow and set a risk level that you are convenient to avoid expensive errors.4. Be mentally preparedKnow when you are not in a position to trade mentally.If you’re nervous or you didn’t sleep well, if something bothers you, take a step back.A good trader has high self-discipline and knows when he or she is not supposes to trade.5. Trading PreparationsWrite down before you begin to trade important points such as minor and major support, resistance levels, alerts for entry and exit signals.6. Set trading plan goalsSet weekly, monthly and yearly profit targets for yourself and, of course, Determine how much you can lose weekly.Maintain self-discipline for losses, if you are not disciplined and not using stop loss, you will find yourself losing all your money quickly.7. Keep your trading RecordsBe organized, and keep records of all your trades, winning and losing. It provides a reference point for future trades. you’ll know what you did right and what not.You should write down essential details such as:What are your targetsWhat are the entry and exit levels for each tradeThe time you took an actionWhat was the support and resistance levelsRecord: write down why you made the trade, and what lessons you learned from it.It’s important to review your trading records to analyze your profit or losses, what was the average time per trade, the drawdowns, and other important factors that you want to follow.8. Set Entry Rules & Exit RulesYou need to be very careful about what conditions you enter into the trade, where you place the Stoploss and under what conditions you exit.If you do not do it, not only that you don’t have a trading plan, which is a recipe for losses, you will have no ability to check whether the conditions you place to trade are successful or not, and if not, then how to improve them.9. After every trading day:Write down your profit/lossMake notes of your trades and the conclusions.Make important notes for the next trading day.

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In FX trading, the 3 types of stop losses are confluence stops, volatility stops and time-based stops. Knowing how to use them effectively is the key to successful trading. (See https://lnkd.in/ec_usAME)#fxtrading #fxsignals #fxrisk #fxmarkets #fxrates

Entering a trade:Unlike the stop loss or the take profit decisions, initiation of a trade gives you a lot of freedom to choose as regards to the timing, quantity and the asset class. But once entered it becomes your position and you have to take care of it with full attention. You can pick and choose your levels to enter based upon your reading of the markets but have to write your trades in a diary first with the stop loss and take profit levels also being mentioned there. What is noted only in minds remains there only and most of the times does not get executed properly and consequently fails you when you need the levels the most, when gripped by the emotions- Greed, Hope and Fear. So, writing the trades is the most important part of trading. You can write as much as you want (The minimum three should always be there- Entry level, Take Profit Level and the Stop Loss level) and should also write your supporting logic for the direction of your trades and when to trail the stop further towards initiation and bring it to your cost. This will help you in getting rid of your trades quickly when your chart pattern changes (For example the RSI moving from being in the trading zone to the overbought or the oversold zone). Those who do not think twice before cutting their trades when they realize that they have gone wrong make more money in the longer run. In trading, money saved by reducing losses ultimately swells the kitty much more. You even save money sometimes by not trading when you are not very clear of the direction or not in a position to monitor your trades. Trade only when you have something in your charts. Better to miss an opportunity rather than enter and repent later. A periodic review of your trades will also help you improve very much. The quantity of the trade also has to be decided upfront and this should emanate from the overall trading policy that you will make even before entering your first ‘professional’ trading call. Somehow there are mostly losses in your bigger positions and profits in your smaller positions and consequently you make losses overall even if you have maintained the RR perfectly in each of them individually. Ideally the Risk Capital has to remain the same in all the positions. What it means is you take positions in bigger volumes if you expect a lesser volatility and smaller ones if you expect a bigger volatility so that the money lost will be almost equal if you hit your stop loss level. Try to avoid taking positions or consider trimming an existing positions if there is some event lurking with very uncertain outcome. You can also consider tightening your stop losses if you are very confident. Please NEVER be over confident in your trades and NEVER remove your stop losses completely till the position is open. Another golden rule in trading is when you don’t understand what’s going on and you still have a position, cut it immediately and re-enter when you again get a grip of the situation.HAPPY TRADING!!!

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How To Earn Online With Swing Trading

🧑💻Why 90% Of Traders Lose MoneyNew Trader, Rich Trader and How I Made Money Using the Nicolas Darvas SystemTrading can be exciting and lucrative for those who take it seriously and approach it with the right mindset and recessionsHowever, it can be a frustrating and costly experience for many new traders, leaving them with little to show for their efforts. Based on several brokers’ studies, as many as 90% of traders are estimated to lose money in the markets. This can be an even higher failure rate if you look at day traders, forex traders, or options traders. In this article, we’ll explore some of the common reasons why this happens and what traders can do to improve their odds of success.🌐Lack of Knowledge and EducationOne of the biggest reasons traders lose money is a lack of knowledge and education. Many people are drawn to trading because they believe it’s a way to make quick money without investing much time or effort. However, this is a dangerous misconception that often leads to losses. Trading is a professional endeavor and must be taken as seriously as any other money-making venture. The barrier to starting trading is low, but the barrier to profitable long-term trading is high.To be 👬successful in trading, you need to have a solid understanding of the markets, how they work, and the different factors that can affect prices. You must also have a clear strategy considering your risk tolerance, investment goals, and trading style.Unfortunately, many traders jump into the markets without doing their homework or seeking the necessary education and training. This can lead to costly mistakes, missed opportunities, and a general lack of profitable trading. To avoid this, it’s essential to take the time to learn as much as you can about trading before you start. This can include reading books, attending seminars, taking courses, and seeking out the advice of experienced traders. Many free resources are available online, including articles, videos, and forums where you can connect with other traders and learn from their experiences.New traders need a profitable trading system with an edge before they even begin putting real money at risk.😳Emotional TradingAnother common reason traders lose money is due to emotional trading. Trading can be highly emotional, and many traders find it challenging to remain objective and disciplined in the face of market volatility.Common emotions that can affect trading include fear, greed, hope, and regret. Fear can cause traders to panic and make rash decisions, while greed can lead them to take on excessive risk and chase after unrealistic gains. Hope can make traders hold onto losing positions for too long, while regret can cause them to second-guess their decisions and miss out on profitable opportunities.#tradingstrategy #company #bseindia #nseindia #tradingforex #india #market #knowledgework #frameworks #ceo #companysecretary #companygrowth #highlight

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Trading plan for EUR/USD on February 21. Simple tips for beginnersEUR/USD continued its corrective movement throughout Tuesday, which started a week ago. Despite breaching the descending trendline, we consider the current upward movement as a "correction." The euro has fallen quite well in the past few weeks, which aligns with our expectations, but it is a bit premature to consider that the downtrend has ended. The corrective phase may continue for a few more days or even a couple of weeks, but then we still expect the downtrend to resume. In general, the targets for the euro are around 1.00-1.02.https://lnkd.in/e4GeJ8r5Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.88% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.Disclaimer: Information provided here to retail and professional clients does not contain and should not be construed as containing investment advice or an investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance.#forexanalysis #eurusd #forexbroker #trading #growth#investing #markets #banks

**NOT ADVICE- MAKE YOUR OWN DECISIONS. EVERY ONE OF OUR TRADES MAY VERY WELL BE LOSERS**What We'll Be Watching Monday: Swing Trades-Crude, this time, has been a buy for us since 7/13. We may look to add to our 2X long position (UCO).We still like the 3X short (TMV) Treasuries trade, and will be looking for another entry, after being stopped-out w a win on Fri.If TSLA closes below 250.00, we may take another shot at a short (TSLS).BITO closing below 14.75 might push us to a short position (BITI).ERX close above 64.11 might be a reason to go long.Day Trades-Possible day trade, to maybe very short-term swing trade, could be a short of the S&P via a futures contract or a SPY put- assuming the mkt opens w a continuation of Fri's weakness, and the S&P's major components follow suit. Lots of "ifs" there. ** ONCE AGAIN- NOT ADVICE. MAKE YOUR OWN DECISIONS. ALL OF OUR DECISIONS MAY VERY WELL BE WRONG!**Remember- we are NOT investors- we are traders. This just a journal of some of what we do, or may do, for those interested few.

KNOW YOUR EXITS, AND YOU KNOW YOUR TRADE!Corollary: If you don't know your exits, you don't know your trade.In markets, when stuff is flying around, there is alwaysthat temptation to get involved as a trader. We tend to get excited by the local price action and don’t want to miss the opportunity. But before putting on a trade, it’s always a good habit to step back, look at a broader horizon and try to figure out at what level you’ll know for sure that you were wrong about your view and need to get out. It can be driven by technicals or fundamentals (usually it’s the former as hard to put an exact price tag based on fundamentals). It can be some strong area of support or resistance, above or below a key big figure etc but it’s YOU who needs to be comfortable and sure about exiting at that level. It can’t be like when the price reaches there, you tell yourself ok let’s wait for another 0.4%–0.5% move before exiting, that would only mean your entry thesis was wrong to begin with. Also try to make sure your stop loss reflects the volatility of the underlying as you don’t want to be the casualty of a choppy market. Next is identifying the take-profit level based on the same factors. Once you have your two key levels, you just need to figure out entry at what level will offer you good risk–reward. If the ratio of take profit vs stop loss is sub 1, then it means the trade itself may have good intrinsic merits, but it’s just not the right level to get involved right now. This thumb rule is more for discretionary traders to avoid getting sucked into a trade too early, if you have models or back-tested numbers to be confident that your strategy will be profitable even after sub 1 risk-reward ratio per trade, please go ahead (that will typically mean an unusually high success ratio.)I have always found it a good practice to split the T/P-S/L levels in a 3:1 ratio to get a comfortable starting point. When trading discretionary, you can exit from the trade earlier but just try to make sure your take profits are usually in 1-3x range ofyour stop loss capital. If you are consistently getting out at sub 1x levels in your profitable trades, it may be time to go back to the drawing board. In spite of your string of successes, it is hard for this to work over the long term.Keeping the decision-making time window wider also helps.Ticks don't make you click! PS: Don’t fret much about missing out on a trade because it turned back before reaching your entry level. Those trades are like the girl/ boy who spurned your advances in college. Some things are not meant to be! There is always a better one round the corner.

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