Trade to Win or Trade Not to Lose- that is the question

To paraphrase Mr Shakespeare, when you create your style, one of your choices is to Trade to Win or Trade Not to Lose. The two things sound very similar but are two opposite philosophies.

Yesterday, I had a comment about the lack of losing trades. I said I'm running at about 27% for losers.

That's the idea!

If you have a lot of losers, you need very big average winners. I can't trade like that. Most of the successful traders I know have low percentage of losers. That's one of the reasons why they are successful.

One of my earliest posts spoke about the importance to me of a high percentage of winning trades.I cannot emphasis this enough. For me, the head games I play with myself have a big part in my trading. I KNOW I cannot trade a method where I have a lot of losers and have to make them up with a big winner. I come from a floor environment where holding a trade for 15 minutes is a very long time. Trading from "upstairs", I have always had to fight the urge to take profits quickly. This is one of the reasons why I nearly always scale out of the first 1/3 of my position at 2 points (ES) or 10 ticks (Dow Euro). I know that often this is too early, but it helps me make the most out of the other 2/3. I feel like I've already won. Instant gratification. A trick of the mind, of course, but it works for me as an experienced trader and for Kiki as the beginner trader. 

I learned Market Profile from Pete Steidlmayer and then Jim Dalton in the early 1980s. Luckily, shortly after that I found range bars . This took a lot of the chop out of the market, as I now had a context and as good a read on vertical development as was possible. My last improvement was being able to see order flow electronically. This took my winning percentage to where it is today. I trade not to lose by having setups that filter out the losers. Within that, I trade aggressively with as early an entry as my plan permits.

As I said in a couple of the comments, I have a number of other setups that trade the peaks and troughs. Because it's top and bottom picking, they are a lower percentage trade, usually, but with higher average wins. I plan to work on these with Market Delta so I can bring the win rate up to the other setups.

As I said, for the time being Kiki only trades the setups you see on the blog. These are pretty stress free and should be with almost NO HEAT unless they become losers, which is about 27% of our trades. This is why I said that I think anyone can be taught to trade if they have no fear of losing by using extensive SIM trading and then position under sizing versus account size.

Today's trading was very smooth. The hardest part for Kiki today was holding her last 1/3 in the last trade. I must admit I had to butt in and make sure she held on.

 

Click chart to enlarge