Here are some interesting statistics for 2000 for my personal account:
Round trips: 173
Winners: 95
Losers: 78
Ratio: 1.22
Super Losers: 8.1%
Noise: 79.8%
Super Winners: 12.1%
Isn't that amazing how the 80/20 principle becomes evident also in one's trading? Basically, I wasted my time on 80% of my trades--trades that fell within one standard deviation of my average gains and losses, and most likely canceled each other out. It was the ones I was more careful about, the ones I had more patience in, done more research on, that I made the most money. And I let them run.
My biggest losers all involved positions that ran counter to the trend, and to make it worse, I did not cover them fast enough. Instead, I let them run.
Looking at my win-loss ratio, one probably wouldn't imagine that I could still manage a +92% gain for the year. A key component to the results was to cut your losses QUICKLY, and let the winners run a bit longer. Of course there's the homework one needs to do, and applying patience is critical. Finally, trade along the line of least resistance. And fight the tendency to trade within the noise, and you'll avoid the wasted time and effort that I went through for 80% of my trades.
By the way, that EMC blow-up of mine was over five standard deviations from my average trade win/loss. Wow.
Rainier |
