Hey hey: what's up my friends, so in today's episode i want to talk about. You know why your winning rate is so low and what can you do about it? So first thing: first, is this number one you don't understand the natural behavior of the market? So here's the deal right, not all markets are created equal, for example, stock market. If you look through any long-term chart, for example the u.s stock market, you know that it's in a long-term uptrend. Yes, we have pullback along the way we have retracement.

We have recessions, but in the grand scheme of things in the long run it's in an uptrend. So, if you don't understand this natural phenomena of the stock markets and you're, looking to short, whenever there's a pullback, when there's you know the price, making a 20-day low or as a correction and you shot the stock markets, what you're gon na find is that you Will you know be losing consistently because this natural phenomenon of the stock markets is an uptrend heading higher, so understand the natural phenomenon of the markets that you're trading and that right should help help improve your winning rate? So, for example, let's say uh in the stock market whenever there's a pullback, there's a correction and you're looking to buy instead of short, that will improve your win rate right. You know by quite a fair bit uh for another example is, let's say the forex market, a pair like aussie, canadian. It has a tendency to reverse right at the previous day highs and lows.

This is kind of like you know the phenomenon of aussie canadian. So if you are unaware of this and you're always looking to buy breakouts of the previous day high selling breakdowns of the previous day low for aussie canadian, then what you're going to find is that your win rate again is going to be poor. Because you don't understand this natural phenomenon of the market, so it's important to understand right. The behavior of the markets that you're trading is it more towards a momentum, trending market, or is it more of a market that reverses every time at the previous day high or the previous week highs? Okay, so that's the first thing.

Second thing is this: you adopt a trailing stop-loss, so there's nothing wrong with using a trailing stop-loss, but if you use a trailing stop-loss, you have to be prepared right to incur a lower winning rate. Why is that? If you think about this right, the purpose of a trailing stop loss is to give the trade some buffer. So you can hopefully catch a trend, but, as you know, right for most markets right, it doesn't trend right. The moment you put on a trailing stop loss.

It trends when it wants to trend it range when it wants to range, so you should expect right that you don't catch a trend on every single trade and also another thing is that for trailing stop loss right? You only exit the trade after the market has moved against you by a certain margin, so meaning you will never exit at absolute highs because you are trailing your stop loss below the highs. Only if it drops below the highs by let's say a certain margin like. Let's say 10 below the heights, then you will exit your trade, so in other words, you're always exiting the trade when the market has moved against you so by using a trailing stop-loss technique. Right, there's always a good chance where you have some open profits and then only to see the market erode it and hit your trailing, stop loss and you end up with a loser watching a winner become a loser so that again right using a trailing, stop loss Or rather trying to be a trend follower, you will no doubt have a lower winning rate as well.

Okay, uh, third thing: your stop loss right is small relative to your target. So here's the deal if you have like a five pip, stop loss and, let's say 100 pip target. That's a very done. Favorable risk to reward risking, like you know, a dollar to make twenty dollars.

But here's the deal the downside to this is that you should expect to be wrong. Often right, you will often see your five flip stop-loss getting hit getting hit, getting hit there. Maybe sometimes, if you know you got lucky, the market will eventually know go to your target and reach 100 pips. So the nature is that if you have a tight stop loss relative to your target, you should also expect a very poor winning rate on your system.

So so what can you do right if you have no poor winning rate, so here are a few solutions for you number one understand the natural behavior of the markets right so, as mentioned earlier, if you understand the natural behavior of the markets, if you know that, Let's say, for example, uh pounding and every time he breaks up of the previous day high it tends to follow through. Then, if you know try to trade in the direction of the breakout, you can see that you will improve your winning rate rather than you know, trading against the breakout. That's one example: uh. Another thing is to have reasonable target profit.

So, as mentioned right, don't you know have like you know, 10 pip stop loss and then, like 200 pick target because more often not your target is not going to be met. Yes, the potential risk to reward on the trade is phenomenal is fantastic right. But what are the odds of you of rather, or rather the market reaching your target? That's the more important question so have reasonable target right. You know maybe having a 50 pip stop loss and your target is at the nearest swing.

High resistance is, let's say, 75 pips away, risking a dollar to make 150. That's fair right, have a reasonable target, and that will improve your winning rate along the way. And finally, i want to share something. Important is this: this is actually with regards to the trailing stop-loss uh thing i mentioned about right.

So, yes, you might have a low winning rate, but it doesn't mean right that your trading system is a losing system because, for example, trend followers. They have winning rate in the realm of you know, 30 to 40, maybe slightly higher 45, but the reason why trend followers are profitable profitable is because their winners are much larger than your losers. So, for example, if let's say out of 10 trades, seven are losers. You lose a dollar age, so you're down seven dollars, but for the remaining three trades every time you win right, you make five dollars, so you can see that three trades multiplied by five.

That's a gain of fifteen dollars minus the seven dollars that you incur from your losses earlier, you're still up a net gain of eight dollars, so the key thing is not really to focus on winning rate nor to have very high winning rate, but rather to strike A balance betw between your winning rate and your average gain to losses. That is really what matters as a trader, but i know this episode is talking about. You know helping you improve your winning rate, but the bigger picture here is really about your expectancy. As a trader, not just your winning rate, but rather your winning rate combined right with your average gain to loss, or rather your average risk to reward on the trade.

I hope that makes sense. So with that said, let's do a quick recap. Number one uh understand the natural behavior of the markets to help you improve your winning rate. Number two uh.

If you are a trend follower, if you are trailing your stop-loss on your trade, you should expect your winning rate to be to be lower number three small top small stop-loss wide profit target will also incur a small, a low winning rate and finally, number four. I share with you a few solutions which is to understand the natural behavior of the markets uh and have reserve reasonable target profit, and the final thing that i mentioned was to do not just focus on winning rate, but rather focus on your expectancy. In other words, right understand your winning rate, combined with your average risk to reward. That's really what matters so with that said, i wish you good luck.

Good trading i'll talk to you soon. You.