This is why high WIN rate TRADING systems are all SCAMS
High win rate trading systems are usually scams because win rate means nothing without profit targets and stop losses. Markets are 99.48% random, so frequent intraday trading operates in noise. The rare exceptions: liquidity imbalances that predict the next tick 81% of the time, and multi-decade interest-rate divergences like Japan at 0.25% versus the US at 5%.
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Your favorite trading gurus always boast about their high win rate system. And that should be a massive red flag telling you to keep away from them. You are getting scammed. Welcome back everyone. In this video I'm going to explain why high win rate systems are never and can never be profitable. High win rates are the fastest way to lose. First of all, scammers deliberately create high win rate systems to deceive and fool naive traders because they know that most new traders automatically associate high win rate with profitability. But high win rate systems are almost never profitable. You can create any win rate you like effortlessly. If you want a 75% win rate, have a stop loss three times bigger than your profit target. If you make your stop loss four times bigger, you've just given yourself an 80% win rate. If you use a one pip take profit and a 100 pip stop loss, congratulations, you have a 99% win rate system. But none of those are profitable. If there were no trading costs of spreads or commissions, the wins and losses would cancel each other out and give a net zero balance. But with spreads and commissions, all of those systems end in a net loss. So win rate by itself is meaningless. But it sure looks good if you're a scanner trying to entice gullible newbies to buy your course. And it is safe to say that almost every single system you see promoted is using that basic strategy and they are a waste of time. But you might be thinking that surely some systems have a real edge and are profitable. What if they have a high win rate and the profit is greater than the loss? Well, yes, if that was true, the system would have a real edge and it would be profitable. And now I'm going to explain why that is almost impossible to achieve. And none of the high win rate systems you see online have have such an edge. It all comes down to the reality of how the markets work. It is a mathematical impossibility to be profitable over the long term in a random market. No one and no thing operating within the currently understood laws of the universe can beat a random market. That is an immutable fact. Another fact is that all markets are mostly random. And in Forex we know very accurately that 99.48% of all price changes are random. And if we equate that to minutes, it works out to mean that just less than seven and a half minutes on average in every 24 hours is non random. So any short term intraday trading system taking multiple trades per day is definitely trading random prices and therefore definitely going to be a loser over the long term, that's really going to upset some people. But it is an inescapable conclusion. 23 hours and 52 and a half minutes in an average day is completely random price movements. So short term intraday traders are gambling. Pure noise. The maths behind this can't be argued with the fate gurus. And the system sellers can make all sorts of impressive sounding claims about their technical analysis and laser guided sniper accurate high probability entries. But drawing lines and looking at shapes on a chart of random data has no more ability to predict anything than looking at tea leaves can predict the next roll of the dice. Random data is just that, random. That's why the high wing rate systems you see online are scammed mathematically. It's impossible for them to make money because they are trading random markets. Now, quick caveat. I'm not saying that high win rate systems aren't possible. They are, and I'll tell you two of them in just a moment. What I'm saying is high win rate, short time frame systems are impossible. Retail day traders cannot have a high win rate and be profitable. The two things are mutually exclusive. But to be profitable you either have a high win rate and almost never trade, or you trade a lot and you have a low win rate. But high win rates are possible. Stanford University carried out a robust study of the Forex market and they discovered that when there is an imbalance of more than 10 million in liquidity on one side of the market, the next price tick would move in the direction of least liquidity, 81% of the time. So in other words, they had an 81% win rate. That's high by anyone's standards. So have I just proved my own argument false? No. The imbalances of 10 million or more in liquidity don't happen often. They may only happen once every three weeks. And the price move they predict is one tick, 1/10 of a pip. That's fine if you're an institutional firm with hundreds of millions to trade and you have the sophisticated algorithms capable of of exploiting those kinds of micro price moves. But it's of no use to a retail trader. And as I said, those situations are not occurring several times per day. They only happen very infrequently. So you need to be very patient. Remember, the markets are random 99.48% of the time. So these predictable liquidity imbalances necessarily can only happen less than half of a percent of the time. In other words, very rarely. Another high win rate system is when Interest rates diverge by large amounts. For example, when Japan has an interest rate of 0.25% and the US has one of 5%, you have a very high probability of a large uptrend on the US dollar Japanese yen pair. You could predict a move like that with above 80% accuracy and therefore have a high win rate system. But those conditions and therefore the trading opportunities only happen once every 20 or 30 years. So it may have a high win rate, but it's not even close to being high frequency intraday again. Predictable non random markets are rare and infrequent. That's the point I'm making. The high win rate day trading systems that are promoted by itself appointed experts selling things to you are scams because they are mathematically impossible to be profitable. You cannot be profitable in random conditions. The irony is new and inexperienced traders are always drawn to intraday trading. High wing rates are the de facto selling point of most systems and those new traders inevitably lose. And then they go looking for another system with an even higher win rate and of course lose again. And then they try to find an even higher wing rate system. They never realize that it is the high wing rate that is causing them to lose. The very thing they search for as the solution to their problems is ironically the actual cause of their problem. It would be funny if it wasn't so sad. So what's the solution? It's actually very simple. You have to leave your winning trades open for much longer time frames and I'm talking days at a minimum, but preferably weeks or even months. You can only profit from non random markets and non random markets happen very infrequently and briefly and mostly unpredictably. So you need to leave your position open long enough to be able to capture and exploit those non random moments as and when they occur and accumulate them in your position. I'll put a link in the description and the end screen to a video teaching a trading system that uses an exit strategy that perfectly does this for you. If you want to be a profitable trader, that's the trade management and exit strategy to use. I hope you found this interesting today. If you have, please subscribe. If you haven't already, leave a comment and give it a thumbs up as all of that good stuff helps the channel grow. And I will continue to put videos like this out as frequently as I can. I really appreciate your support in the comments section. Let me know what topics you want me to cover or anything specific you want to learn. I'll do my best to deliver in the meantime, why not click to watch one of the other videos on the screen now? Thanks for watching. I'll see you next time.
