YES, you must be thinking.
But the truth is NO.
I have known a number of successful traders who hardly even have 60% winning percentage with their trades.
Then how on earth these people survive?
The real key in their survival lies with their risk reward ratio. Most of these traders that I know trade with a risk reward ratio of at least 3:1.
You place a trade in a particular direction and you place your stop loss at 50 pips (Some of you may think that this is a hugh stop loss) and set your target profit at 150 pips.
Even if you lost 3 consecutive trades in a row, one win will cover everything back.
Therefore if you have a trading system that can help you to win 50% of the time, you will still be banking in money months after months.
Imagine you place about 100 trades per month and you have a risk reward ratio of 3:1.
Let says that you always place a stop loss of 50 pips and your strategy usually makes about 150 pips. If you have a winning percentage of 50%, below are the calculations.
Total Losses = 50 pips x 50 trades = 2500 pips
Total Wins = 150 pips x 50 trades = 7500 pips
Grand Total = 5000 pips
The problem with most new traders is that they are constantly in search of a ‘Holy Grail’ system that can produce them 100% winning trades. If you are also one of them, I have to tell you the truth.
There is no strategy that can give you 100% winning!
All you need is a strategy that can give you 60% winning percentage and you stick to it like glue. All you need is to trade it with a high risk reward ratio and you will be laughing to the bank.
The key reason why people give up a trading system because they are unable to stomach consecutive losses with their system. Therefore it is very important for you to understand that losing is part and parcel of trading and you should always stick to your trading system and in the long run, it will be profitable.