Monday, October 10, 2016

Secret Trading Leak: Your Winning Trades Will Crush You

What if I told you that your wins are your biggest trading problem?

That's right, wins are what hold average traders from moving past break even to profitability. Most traders focus on their losses, completely ignoring the real problem.

The hardest trading leaks to identify and correct are the one that masquerade as wins.

You see that 65% win rate and feel good about yourself, then wonder why you are not crushing it. So you review your past 100 trades and analyze every single loss in search of that trading leak that you'll correct, magically turning you into the second coming of Jesse Livermore.

Unfortunately that's not how it works, even though that's what just about everybody does (no wonder 95% of traders fail).

So you want to trade Jesse Livermore?

Then fix your wins.

Every losing or break even trader I've ever worked with made a fatal flaw: he or she did not know how to win. That 65% win rate is deceptive. It often means you are either micro-managing your positions by cutting your wins off early, or you are winning less than you risk, creating a negative reward to risk.

Now go back and analyze every single win and ask yourself these three questions:

1. Did I stick to my initial plan (assuming you had one)?
2. Are my wins bigger than my losses?
3. Did I exit at the right time?

If the answer to these questions is "no", then you've got some work to do.

You must figure out how to win big, even if that means lowering your win rate. Remember, winning traders care about profitability, not win rate.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at


Ashish Arya said...

Your article is excellent .. an eye-opener for me...Thank you so much! i will do what you have suggested and will analyse my trades.

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Suzan Baker said...

So, even when I am winning, I am not really winning? Great!
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Suzan Baker said...

Winning like this is almost as much of a burden as losing.
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