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I agree with some of what Ray said here. However, I will point out that
most
systems being sold to the public are mechanical, and losing trades are
inherent. Ray suggests that 90% winners is possible. I do not doubt
this, but
I feel that such traders are the extreme exception.
The individual trader has a distinct advantage over the money managers
since
he/she can afford to be patient and wait for the best set ups and
highest
probability trades. However, if an individual is trading a trend
following
system which trades a diversified portfolio that achieves its annual
gains from
a handful of trades, that individual can not afford to be as selective.
This
is why it is important to cut losses short and let profits run. A good
trend
following system will do this.
In the end, achieving a high win rate suggested by Ray requires that a
trader
take profits quickly, and therefore, this type of trader will not likely
hold a
position over night, since anything can happen over night. Also, this
type of
trader will need substantial experience, patience and an arsenal of
strategies.
I think Ray's suggestion that new traders try to achieve a 90% win rate
is a
lofty goal. I believe that trading talent is a significant factor in
achieving
such a goal, and such talent is not necessarily learned.
Scott Cole, CTA
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