The key is stop placement and profit target, so as to lose very little when you are wrong and win the full profit target margin when you are right. Stop placement is very tricky and often seems counter intuitive. There are traders who use variable stop placement ideas; they look at the day's unique trading conditions or important support / resistance levels and place stops accordingly.
You can be profitable even with a 40% win ratio!
So if you can win with just a 40% win ratio and be profitable, imagine what a 70% can do. 70% is possible but overall profitability will still be much more on some trades and very limited on other trades, in fact 90% of the week's profits may come from a single big margin trade. Still it is a good idea to try and have an overall 70% success rate as this increases the probability that you will be able to pick up these rare, high profit trades as and when their setup occurs.
70% is achieved by many winning traders
Most successful, winning traders make extremely high, weekly and monthly profits by managing to maintain this percentage of winners, but also and more importantly they manage to have short losing streaks of no more than 2 trades, sometimes 3. They do not fight markets if they are wrong, they do not increase trading size either, instead they prepare patiently for their next winning streak which will bring profitability and may be as long as 7 trades, yes 7 winning trades in a row!
70% win ratio is safer as well
A 40% win ratio system can still make money but is more vulnerable to fast market changing conditions and possible nasty market surprises that may overpower the trading system for as long as two months. This is where the 70% win ratio trading system is less likely to fail. Why? Simply because the 70% win ratio trading system examines markets more closely and in more detail, which is why it finds more profitable setups after all.
All in all, both from a profitability, safety and consistency perspective the 70% win ratio is the best system to use. The maximum winning ratio good traders have is also around this figure, so a consistent 70% win ratio you may say suggests that you have made it to the top of the game!
A consistent 70% win ratio can turn even a small trading account to a huge account, in fact, if one uses the right money management technique to increase their trading size properly and slowly as their account grows in value; it is possible to turn $20,000 into $1,000,000 in just over a year. And there are people who have done it in day trading. By no means is it easy. It takes a lot of discipline and metal strength to control the fear and the greed, but it certainly is possible
Source : azinearticles.
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