Vladimir Ribakov shows why a 70% win rate can still lose money while a 40% win rate can profit. The difference is risk management: controlling loss size per trade matters far more than how often you win.
What you need to understand, that the win rate is not everything in trading. And high win rate, especially super high win rate like so many try to present online with fake promises, could be very, very misleading. Why it could be misleading? Because Without proper money management and risk management, even with super high win rate, you could still be losing money. Let's see how. So a high win rate might give you a sense of success, even looks like a huge success, but it's just one aspect of trading because quantity of the wins means absolutely nothing if your bigger losses offset all your gains. And that's where it's very, very crucial to understand these numbers. So finding a quality trade is more important than number of wins. You could even win 1 trade out of 5, but with proper risk management and money management to make money out of trading. What you have to understand, it's losing less is the real win. It's not just about having bigger number of wins, it's about minimizing the losses is just as crucial. And by that I mean cut out trades that you should not be there anymore or didn't have to trade at the very beginning. You have to control your lot size, use stop loss and position size. It will help you to limit the loss and the risk per trade. And instead of focusing on how to make more winners, practice and focus on to cut out unnecessary losses. We all enter trades we shouldn't once in a while, some of us even more often. So these are the trades you would want to learn to cut out quick. As soon as you realize there is no reason to be in a trade, get out. Here are some examples of situations when the win rate misleads traders. Look at this high win rate where you actually have 70% win rate, But you won out of all your trades $350 and lost $800, which means you are in a net loss of $450. 70% win rate but still losing money. Believe it or not, that happens. And on the other hand, with only 40% win rate, you could be in a situation when you earn $800, losing $200, and be in a net profit of $600. Only 40% win rate, but making money consistently. And here are 4 steps how to manage the risk properly. 1, set the risk per trade correctly. Decide on the maximum percentage of your account you are willing to risk per every single trade. 2, use stop losses when you trade the shorter term especially. 3, calculate the position size. Don't just enter 1 lot when you have only $100 in your pocket or $1,000 in your pocket and use all the maximum leverage. It will simply blow up your account. Plan your trades in advance. Enter trades based on a solid strategy, proven strategy with predefined risk and reward ratios. And here are very common mistakes to avoid when it comes to win Overleveraging— when you risk too much by using leverage without proper account management, you would be losing money. Avoid revenge trading— trying to immediately recover losses by making impulsive emotional trades will make you lose money. Ignoring the risk— focusing solely on a high win rate and neglecting the importance of protecting your capital will make you lose money. And lack of patience— Not waiting for the optimal setups and even avoiding setups sometimes and just jump in on impulsive trades will make you lose money. So the bottom line, don't focus only on the win rate but also on the risk-reward ratio. If you generate, for example, 50% success rate, that you have to make sure that your average reward is bigger than your average loss. It's that simple. If you maintain that, you will be making money. To learn more about trading, join our family, Home Trader Club. Get your access to our full courses, real-time education, and trades. Follow the link in the bio or in the description.
Stop Buying USDJPY: The Critical Resistance You Need To See #forex #tradingstrategy #shorts
