Online, you’ll often read about Forex trading advertisements that boast of more than 90% winning trades.
Sounds great doesn’t it? Would you pay $100 for a trading system that may win 90 out of every 100 trades?
If you answered “Yes”, you’re in trouble!
Unfortunately, the truth is that a high winning percentage has little to do with being a profitable trader. In reality, it’s easy to have 90% of winning trades and still lose money.
Don’t believe me? Go ahead a search online search for the “turtle traders”. If you’re familiar with them, you’ll know that they are very profitable traders with only a 20% winning trade percentage.
Allow me to explain
Imagine you make 10 trades in a month, and 9 of these trades are profitable for $1 per winning trade. This means that you have a winning percentage of 90%, with $9 in profit.
And if you have only 1 losing trade out of 10 (i.e. 10% losing trades), but you lose $10 on that one losing trade. In total, you would have lost ($9 - $10) $1 among all your ten trades.
Can you now see why a high winning percentage doesn’t mean that you’ll be a successful trader? You see, it’s not about how often you win, but how MUCH you win.
So don’t fall for the marketing tricks
Many advertisers use high winning percentages as a sales tool to get you to buy the trading systems they are selling. They know that traders like to win all the time, and who doesn’t like to win often? These advertisers try to appeal to everyone’s desire to win, and unfortunately many people fall for their trap.
Conclusion
As I’ve explained, it’s easy to have 90% winning trades and still be a losing trader. At the same time, you can have a low winning percentage, but be a very profitable trader. In reality, winning percentages have very little to do with a trader’s success.
So don’t fall into the advertisers’ trap when you see their “high winning percentage” claims next time. When people use high winning percentages as a sales pitch, chances are that they know very little about what it truly takes to be a successful trader. Be careful!
