Adrian Reid explains why trading strategies with low win rates can still be profitable: typical examples win ~30–40% of trades while losing 60–70% of the time, but winners are large and losers small so expectancy is positive if followed consistently. He emphasizes the psychological friction—humans are conditioned to be right and to receive regular pay—making it hard to accept frequent small losses and occasional big wins. Reid advises disciplined repetition of the trading process despite account volatility; over time the account grows as the strategy's positive expectancy manifests.
Questions this video answers
30–40% winners (34–40% mentioned as a narrower example).
60–70% losers.
Chapters
I've a number of trading strategies that make money. Let's say 30 to 40% of the time, 34 to 40% of trades are winners and 60 or 70% of losers. But the winners are big and the losers are small. So when you work out the math, the expectancy is, is positive and you make a lot of money if you follow them consistently. But psychologically, we tend to not like that. Like, as humans, we like to be right. We only trained in school get the right answer. When you put your hand up, you want to be right. Otherwise the class laughs at you. When you do a test, you want to get it all right so that you make 100%, so that you get rewarded and applauded by your parents and by the teacher and all the other kids go, wow, we're trained to be right.
We're not trained to be traders.
And sometimes, actually a lot of the time, it's way easier to make money as a trader when you're willing to be wrong. If you'll just say, all right, I'm going to be wrong 70% of the time, 70% of my trades are going to be losers. But when I'm right, 30% of the time, they're going to be big winners, and when I'm wrong, they're going to be small losers. So when it all adds up, I make money. It's psychologically tough because it's not what we're conditioned for. But in the markets, it's actually easy. Well, easier, right? The maths is easier. It's also a little bit bumpy, but most people don't want bumpy. Most people want to go to work, do their job, get paid, go home, watch tv, go to work, do the job, get paid, right?
But the market is not like that. The market doesn't want to pay you a regular salary. The market will reward you for following a strategy that works, but it may reward you one day, it may take money away the next day, it may reward you one month, it may take money away the next month. So there's a second thing that makes trading really hard is we're conditioned to go to work, get paid, go to work, get paid, go to work, get paid.
And in trading, what we've got to do is do the work, do the work, do the work, do the work, do the work, do the work, regardless of what's happening in our account. Because over time, if we keep doing the right things, what happens?
Account grows.
So this whole psychology of struggling with low percentage of winners but big wins, like it's very common. Most, most people have a hard time with that. But as we can build confidence with the strategies that they work, then it becomes easier and easier.
