Home > Forex Articles > When Choosing A Forex Signal Provider, Should You Look At Win Percentage?

When Choosing A Forex Signal Provider, Should You Look At Win Percentage?

Todays Date: October 18, 2018

Are the better traders closer to 100% winning trades, or is that just the way it seems? In contrast, the closer the traders are to 0%; it would seem that they are worse. There is more to trading than winning the most possible trades, even though that seems peculiar. This article will hopefully help fill you in on why I would argue that a 95% win rate is infinitely worse than a 65% win rate.

Our first look will be at those traders with a low win rate, say those with a classification within the 0% to 40% range. If the trader falls closer to the 0% rate one would think him to be a genuine loser. In truth, most in this category are losing traders. But you will sometimes see a trader trying to snag really large moves with really tight stops. This guy may show an extremely low win percentage but could still be a very successful player.

Lets look at the next range, say from 40% – 70%. Most winning traders will fit into this category. These traders don’t win by picking all winners and only the rare loser. Indeed, they may have more losers than winners. The secret to their winning ways is that they know how to manage their open trades. They avail themselves of rational stops that will more often than not be executed. This behavior will often result in a losing trade; however, it is a small, basically inconsequential loser. These losses are only a small percentage of their successful trades. These traders usually have the ability to cut their losses and let their winners run free. Not many traders have the discipline to actually exercise this simple concept. They go all or nothing and wind up with mostly nothing.

The last group are those with a very high win % (over 70%). It seems the closer to 100% these traders get, the more people want to trade their signals. Unfortunately the opposite is probably the correct play. These traders win an incredibly high amount of the time because they often take profit off of the table as soon as it appears. This strategy is fine if you also plan to cut losses in that manner. But traders with 95% win rates and above do not have this strategy in mind. Rather than accepting a small loss and moving on with their day, they will let a loser run indefinitely and even add to that position in many cases. This eventually wipes out months or more of winning trades all at once and in the end has no chance of success. One 500 pip loser wipes out 500 one pip winners. Keep in mind that this trader would have well over 99% winning trades and still be an over all loser.

Do not think for one minute that the reason for this article is to convince you that no trader outside the specified ranges is automatically a losing trader. I’m quite sure that there are traders that are successful with a win percent falling outside of the above ranges. The point of this article is to lead you to thoroughly investigate the trader with the 95% win rate as he could implode upon himself (and you) at any minute.

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