Although your winning trade percentage is an irrelevant statistic when it comes to your profitability, it does help when you’re starting out, to have the motivational boost when trading.
Forex traders struggling to find their way or suffer too many losses can take these five steps to change their results.
For many new Forex traders (or any trader, for that matter) the hopes of making millions of dollars overnight are long gone, and all they want to do now is not lose money and change their trading accounts. There are many mistakes beginner, and even some experienced traders make to help bring themselves into this situation, and this is why I came up with the top 5 methods traders can do to change their accounts and their performance!
But before we go deeper into that, there are a few aspects I want you to consider. Again, we will cover how to increase your winning trade percentage with your current strategy but also realize that your win ratio is not a determining factor of how successful you are. It might play a role in keeping you motivated and less stressed as some traders are. So, increasing your winning trades over your losses and the five tips I am going to share with you aim at making you a better trader overall.
Easily the top question I see beginners asking, “What is a good winning percentage for my trading?” for a good reason too! Many people fall under the misconception that winning more trades than you lose makes you better at trading. That’s not the case! I personally know traders who might have only some 20% of their trades that are winners with losing over 80% of their trades. How could this be? Risk management is the single most crucial factor when it comes to being a successful and therefore profitable trader. If you can hedge and cut those losing trades short, yes it might still be a loss on your record, but you can make it up with trades that yield a much higher dollar amount which makes you profitable.
I know you’re reading this because you want to see more winning trades than losers, I get it. We were taught to win and win as much as possible, but with trading, don’t let the focus on winning trades as much get you down and suffer losing equity on your account. If this trader who makes six-figures a year, passively, can be okay with losing 80% of his trades then why can’t we all?
On a different note, I have come across five unique methods that will help any trader using any strategy to see an increase in their winning trade percentage and performance.
Traders, most of whom come to Forex, want to make a lot of money and do so very quickly. To achieve this, they begin to persecute the “Holy Grail,” which will make them all their wealth and achieve their wildest dreams. Instead of looking for a trading strategy that will offer them a gradual success, they are looking for the latest fad and fancy indicator that will supposedly do all the work for them. I don’t want to be the bearer of bad news, but I’m here to tell you that we would all be rich if that were possible!
If you are serious about making money in the Forex markets, it’s time to get rid of that mentality and learn a method that you can use for the long-term.
One way markets can be traded successfully is to trade what is called “price action trading” that has been around for a long time and will last for a long time to come. Price action trading does not stop every time market momentum changes.
Price action trading involves reading the stock price on a chart and focusing on repetitive high probability price patterns. Price Action trading is a very simple method that most beginner traders can get to know with a little help and proper training.
Once a trader has selected the method that best suits their trading style, they must abandon the idea of the “Holy Grail” and begin to perfect their chosen trading method. Hacking and changing trading methods only leads to confusion and frustration.
The only real way to perfect your chosen trading strategy is to commit and practice it until you have perfected it! Practice makes perfect.
Most beginner Forex traders have the common misconception that the lower the time-frame chart, the more opportunities they have to place trades and earn more money. While it’s true that traders get more signals in lower timeframe timelines, it’s also true, the lower the timeframe, the falser signals (fakeouts) there are and the harder it is to make money.
Traders can start seeing increases in their winning percentage just by only taking this point alone! In the higher timeframe charts, most trading activity should be for beginning traders.
One of the best reasons why the daily chart is much more powerful than a chart with a lower time window, such as the 1-hour chart, is the time it takes to get the signals. An example of this is an inside bar.
If we see an inside bar on the 1-hour chart, we know that the price for one hour cannot break out of the previous candle’s range. However, if we see an inside bar on the daily chart, it means the price has gone through all of the trading sessions, including meetings in the UK and US, and the previous day’s price could not be exceeded.
Obviously, a candle with 24 hours of information tells us much more than a one-hour candle, and because of this extra time needed for the daily chart signals, compared to the lower timeframes, the signals are much more reliable and powerful.
Once a trader has committed to trading only the larger timeframes on the daily chart, it’s time to get rid of one of the most common trading mistakes: which is watching the charts all day.
Watching charts all day is a grave trading mistake many traders make. If traders look at the charts all day and do nothing, that would be fine, but if they watch the charts all day, traders will start making mistakes like:
If a person has committed to trading only the daily charts, they only need to look at their charts once a day. That’s it!
After the markets close for the weekend, the trader should turn to their charts and look for potential trade setups. If there is a trade, you should set your risks and input, stops, and take profit levels. If there is no trade, you must turn your computer off or step away and go do something else!
You cannot do anything anymore. The market must move, and it will, whether you watch it or not. Go away and let the market do its thing.
In the foreign exchange market, frightened money is lost money. A trader who places trades with scared money can just give it to a charity – it would be better than throwing it in the dumpster. The reason for this is that when a trader is afraid, he makes trading decisions that reflect that.
The trader, who plays or gambles with scared money, will commit all sorts of psychological mistakes that will ensure that money is lost – therefore it can’t even be considered trading at that point.
Come back and read this when you have time: The success stories behind five of the most successful Forex billionaires
Trading with only money you can afford to lose is the very first rule of trading Forex and any other financial instrument. Actually, it’s the first rule in investing money into anything or lending money to anyone. The only money that you should ever risk in Forex markets is money a trader can afford to lose. Traders should never risk money that they need for their children or put food on the table! This rule is important. However, I understand these days not everyone can afford to lose any money, right? Well set a budget for yourself and put aside what you can every month until you have enough.
Some people will say, “But I only have $100 for a trading account.” That’s fine! Many brokers offer mini and micro accounts that you can trade while you only risk a few dollars at a time and continue to use proper risk management and money management tactics. Over time, you can add more funds to your account to build it.
Perhaps one of the most overlooked areas in trading is the Psychology section. Many traders focus day after day solely on their trading method or system. Because of this, many people fail at trading Forex, and unless they work on their minds, they will continue to fail.
Many mistakes a trader makes are based on how they approach and think about markets and their trades. Trading is a fight that is conducted in the mind. If a trader does not have the right mentality and mindset, Forex will be a tough fight forever.
Every trader must learn to focus on this aspect of trading and start learning everything they can. You will never know everything, and you will never know enough. The sooner you can submerge yourself into the trading lifestyle, the sooner you will be successful. Watching the right shows, listening to the right radio stations, podcasts, and reading blogs and different books from professional traders is a great way to learn skills that you can implement in your trading plan.
A great book that will help you think about the Forex markets in the right way is The New Market Wizards by Jack Schwager. I strongly recommend buying this book and applying all its principles from some of the greatest trading minds on Earth.
Well, you’ve read this far, and I haven’t provided you a number, which is what you came here for, correct? Other than the sake of tracking performance which still isn’t a reliable indicator, your winning trade percentage is irrelevant. However, it’s still good to set goals, and the more goals you have that are achievable, the more successful you will be.
Even with tracking your monthly and daily growth percentages, this statistic is more relevant but setting your goal too high could cost you. It could take away from your trading mentality. For instance, my goal isn’t to reach 1,000% percent growth on assets every month. Have I reached that before? Yes, and plenty of times, yet my monthly goal still stays at only 5 to 10%. I know with 5 to 10% I don’t have to take unnecessary risks and when I don’t have to take unnecessary risks, guess what? My winning trade percentage is also higher.
Really and truly, just as a psychological kick my monthly winning percentage goal is only 51%. This 51% isn’t back by research or science, but every month I hit 51% I achieve my goal.
At the end of the day, you must find what winning percentage works for you. I’ve had months where I placed 400+ trades without losing a single one, but that was very stressful, and I would not do that every month and still want to trade. So, in my book, 51% still keeps me winning on all levels:
Let me know what you think. If you have taken this path as a trader what winning percentage seems ideal for you?