How do you establish a win-loss ratio? How many trades do you need to do? The more trades the better
but you will need at least 100. We like to break in down in to groups of 20 trades and see what the
ratio is on this small group of trades. If your ratio gets better after 5 groups of 20 trades then
you are starting to know what your win loss ratio is. If you start out at 4 wins 16 losses the first
round and end up with 15 wins and 5 losses, you have become a better trader and more skillful at using
your trading strategy.
This means you have 25% losses and 75% wins. So if your wins are larger and the loses are smaller,
you will have a successful trading account. This means you will lose 1 out of 4 trades. If you
execute all the trades exactly the same then you can pin point the problem areas in your trading.
By doing the same thing each time you place a trade, you are developing a mechanical trading style.
You just see the trade and pull the trigger.
When you have a loss you need to still reduce the pain and emotions. You need to make the money you
lose not so valuable. Also set a limit of how much you will lose before you go back to demo trading.
All of your testing should be done in a demo account to get the skills you need to trade well.
It doesn’t hurt to go back to demo trading if you have a losing streak. Do another 20 trades, get
your rhythm back then return to live trading again.