August 3, 2015

What is the Relationship Between Wins/Loss and Profits?

The business plan is based on aiming for a strategy giving you 7/10 winning to losing trades. Actually depending on how much you make on wins, you could be profitable with a 4/10 strategy. The key is the cut losses short, and then re-enter if the trend looks in place.

Taking small losses is a good idea.

Taking small losses, then re-entering if the trend is in place, is a professional way of trading. This is because small losses are better than big ones obviously, and you never know if a small one will become big.

But, taking small losses can increase the number of losing trades you have. So is it worth doing? Yes, because professionals prefer being profitable by having small losses, and more profits, than having lots of wins and big losses making you less profitable overall.

Pips Predator works on Option B and C below. Most private investors are Option D, and some are Option A (they achieve the high number of wins by never exiting losing trades and building up trouble!).

 

Option Wins Losses Profits Per Winning Trade Losses Per Losing Trader Overall Outcome
A 7 3 Small Big Loss-making
B 7 3 Small and Big Small Profit-making
C 4 6 Small and Big Small Profit-Making
D 4 6 Small Big Loss-Making