Tips and tricks on how to increase your trading win rate

Every trader enters the financial market with dreams of massive gains, inspired by stories of professional traders making fortunes like a degen.

But here’s a question: do these traders win all the time?  The simple answer is no.

Even the best in the business have win rates of only about 50% to 55%.

Embracing losses

In trading, just like in sports, it’s not about winning every single time.

It’s important to realise that losses are part of the game, even for the pros. So, successful trading isn’t about never losing—it’s about making sure your wins outpace your losses.

But how exactly can a trading strategy give you an edge, and what win rate do profitable traders actually achieve?

Balancing your win rate with a good reward-to-risk ratio

Risk-Reward Ratio = Potential Profit / Potential Loss

Believe it or not, professional traders don’t win every trade. Yet, they still manage to rake in significant returns. If you know how to manage your risk, you can achieve consistent profits with a win rate as low as 30% to 50%.

Understanding win rates

So, what’s a win rate? It’s simply the number of successful trades divided by the total number of trades, expressed as a percentage.

For example, a 50% win rate means you win half of your trades.

Many traders get fixated on their win rate because, naturally, everyone wants to be right all the time. But even top athletes like Lionel Messi in football or Maximilian Günther in Formula E racing don’t win every point.

Pay close attention to your reward-to-risk ratio, aiming for scenarios where the potential reward significantly outweighs the risk.

Imagine this: if you win 5 out of 10 trades, your win rate is 50%.

If those 5 wins earn you $1,000 and your 5 losses cost you $500, you still come out ahead with a net profit of $500.

This shows how even a 50% win rate can be quite profitable.

For a deeper understanding on reward and win rates, see this:  Forex risk: reward and win rates
Risk management plays a huge role here. Professional traders are masters at managing their risk. They use strategies like setting stop-loss orders to limit potential losses and take-profit orders to lock in gains.

Source: VT Markets

George Soros, a legendary trader, once said:

“It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.”

In a nutshell…what does all this mean for you?

It means that being right half the time can lead to substantial profits if you manage your risk and develop a solid strategy with a favourable reward-to-risk ratio.

Not every trade will be a winner, but with smart risk management, your profitable trades can cover your losses and still leave you with an overall gain.

So, remember, it’s not about winning every trade—it’s about making your wins count more than your losses.This will pay off in the long run. With this mindset, you’re on your way to a successful trading journey.

Also, practice makes perfect. Need to backtest your trading strategy?

Open a FREE demo account now.

CURRENCIES

US Dollar Setups:

• Analyzing EUR/USD, AUD/USD, and USD/CHF.
• Path for a lower Dollar as economic data deteriorates.
• Focus on EUR/USD ahead of ECB rate cut.
• Dollar bulls eye lower AUD/USD amid waning risk appetite.
• Swiss Franc advances, overheating signals flash red.

A Path for a Lower USD Comes into View as Data Deteriorates:

• Notable decline in US economic data.
• GDP now forecast shows massive turnaround in Q2 growth.
• Disinflation narrative returns with April’s CPI and PCE data.
• Accumulation of weaker-than-expected data observed.

EUR/USD in Focus Ahead of the Highly Anticipated Rate Cut:

• ECB gearing up for first rate cut.
• Market reaction likely muted, attention on path of rate cuts.
• EUR/USD attempting bullish breakout, conviction lacking.
• Challenges to EUR/USD downside, key support levels.

Swiss Franc Advances at Pace but Overheating Signals Flash Red:

• USD/CHF plummets, bearish setup.
• Immediate threat from 200-Day SMA and RSI oversold territory.
• SNB Chairman dentifies weaker Franc as risk to inflation outlook.
• USD/CHF moving lower, potential entry points awaited.

Dollar Bulls Eye Lower AUD/USD as Risk Appetite Wanes, Iron Ore Prices Ease:

• AUD/USD may provide opportunities amid waning risk appetite.
• Metals struggle to find bullish momentum, iron ore prices decline.
• AUD/USD eases lower, key support levels to watch.

STOCK MARKET

US job market hits milestone on long, strange trip back to pre-pandemic normal:

• Beveridge curve: A wonky economic chart reaches pre-pandemic levels.
• Federal Reserve Governor Christopher waller’s insights validated.
• Job openings and unemployment rate relationship.

Not a marquee concept:

• Significance of the beveridge curve.
• Shifts during the pandemic and return to pre-crisis levels.
• Further progress on inflation and the last mile.

Job openings to unemployed:

• Economic reopening and surge in job openings.
• Impact of the health crisis on labor supply.
• Realignment between worker demand and availability.

Quits Rate:

• Pandemic’s influence on labor market dynamics.
• Historic reshuffling of the labor market.
• Stabilization of the quits rate and implications.

Unemployment rate:

• Sustainable unemployment rate for stable inflation.
• Comparison of pre-pandemic and current unemployment trends.
• Factors affecting labor market functionality.

Monthly payroll growth:

• Anticipation of May job growth data.
• Impact of population growth on job requirements.
• Sustainable job growth rates and post-pandemic realignment.

Click here to open an account and start trading.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Dear Client,

Shares product NVIDIA is about to conduct a share split after the market closes on June 7, 2024. Starting from the market opening on June 10, 2024, NVIDIA expects to provide investor trading in divided contracts.

After the share split, please be aware of the following:

1. The trading volume of NVIDIA open positions will become 10 times the original lot size.

2. The “opening price” and “take-profit/stop-loss setting price” of NVIDIA’s positions will become 1/10 of the original price.

3. NVIDIA’s price at the opening of the market on June 10 is expected to be approximately 1/10 of the closing price on June 7.

4. After the market closes on June 7, all NVIDIA pending orders in real accounts will be cancelled.

5. After the market closes on June 7, all NVIDIA orders in the demo account will be cancelled, including open positions and pending orders.

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

CURRENCIES

Key Events and Predictions:

• ECB Rate Decision:
  • ECB to cut interest rates by 25 basis points on Thursday.
  • Possible timing of the next cut: Markets suggest September 12th or more likely October 17th.
  • Importance of ECB President Christine Lagarde’s signals on future cuts.
  • ECB post-decision press conference to be closely monitored.
• US Jobs Data:
  • US jobs week concludes with NFPs on Friday.
  • Prior releases include JOLTS, ADP, and initial jobless claims.
  • Market’s view on US rate cuts pushed back due to high inflation.
  • Any weakening in the US job market may prompt re-pricing of US interest rate cuts.

Market Movements and Technical Analysis:

• US Dollar (USD):
  • USD under pressure, nearing a two-month low.
  • USD index is testing the 200-day simple moving average.
  • A confirmed break lower could see USD trade below 104.00.
• Gold:
  • Gold is vulnerable to a move lower.
  • Rise in US Treasury yields influencing gold prices.
  • Target level: $2,280/oz.
  • Friday’s NFPs will be critical for gold’s future performance.
• Nasdaq 100:
  • Index turned lower, affected by performance in Magnificent Seven members.
  • Pullback from a sharp early sell-off.
  • Friday’s price action will be crucial for potential recovery.
  • Index remains vulnerable due to its concentration in a few mega-cap companies.

STOCK MARKET

Key Market Indices:

• Nasdaq Composite (IXIC): Near flat over the past five trading sessions.
• S&P 500 (GSPC): Rose less than 0.2%.
• Dow Jones Industrial Average (DJI): Down nearly 1%.

Market Performance in May:

• Stocks stumbled at the end of May.
• Investor enthusiasm for AI paused.
• Concerns over Federal Reserve holding interest rates higher for longer.

Upcoming Labour Market Data:

May jobs report expected:

• Forecast: 185,000 nonfarm payroll jobs added.
• Unemployment Rate: Expected to hold steady at 3.9%.
• April Data: 175,000 jobs added, unemployment at 3.9%.

Inflation Insights:

• PCE Index Update:
  • April reading showed a 0.2% increase from the prior month.
  • Lowest monthly increase in 2024.
  • Economists noted it as better news on inflation compared to Q1.
  • Investors’ interest rate cut expectations remained unchanged.
• Federal Reserve Outlook:
  • Officials require “greater confidence” in inflation’s decline before cutting rates.

Dear Client,

New contracts will automatically be rolled over as follows:

Please note:

• The rollover will be automatic, and any existing open positions will remain open.

• Positions that are open on the expiration date will be adjusted via a rollover charge or credit to reflect the price difference between the expiring and new contracts.

• To avoid CFD rollovers, clients can choose to close any open CFD positions prior to the expiration date.

• Please ensure that all take-profit and stop-loss settings are adjusted before the rollover occurs.

• All internal transfers for accounts under the same name will be prohibited during the first and last 30 minutes of the trading hours on the rollover dates.

If you’d like more information, please don’t hesitate to contact [email protected].

Famous for his principles in value investing, mainstream media regard Warren Buffett as one of the most successful investors of all time. Buffett runs Berkshire Hathaway (Symbol: BRKB), one of the favourite stocks for many investors in the world. 

But there is an alternative school of thought challenging that Warren Buffett’s principles are “old school, obsolete, unrealistic and unsexy”. 

Buffett’s principles and his lifestyle 

Keywords of value investing principles are “long-term”, “patience” and “value”. Very much slow and steady. And people tend to forget that Buffett started investing when he was 10 years old, and he has since then been consistent until today. With an average ROI of 22% per year and compounding power, it is easy to see why Buffett ends up being one of the wealthiest people on the planet. 

Realistically though, how many people start investing at the age of 10? Probably no one else apart from Buffett himself. 

Modern day lifestyle, inflation and debt  

Consider an alternative scenario where Buffett only starts investing when he was 30, whereby he would have been drowned with student debts from pursuing a master’s degree or PhD. With a regular job, he is only left with some USD500 a month after deducting the necessities. At the same ROI of 22% per year, he would end up with 99.9% less even after a period of 30 years.  

There is just no way Buffett would be labelled as “the most successful investor”, even if he had been disciplined in his investment journey based on this alternative scenario. 

The truth is that most people belong to this alternative scenario rather than being born as an investment prodigy who would start at the age of 10.  

Add inflation into the picture and the ROI would be eroded to somewhere between 15-18% per year. Growing your wealth with a small capital and at such a speed is just not enough to keep up and live a decently happy life, much less to achieve financial freedom or becoming rich. 

Value investing with little money down does not make any sense 

Once again, consider yourself as an individual in the alternative scenario mentioned earlier. With just USD 500 spare cash a month and a long-only strategy, it is not easy to salvage a bad entry point, especially if you entered at the highest point of the market. It is also mentally painful if you decide to practice dollar cost averaging (DCA) when the market is crashing, as the more cash you invest, the more your portfolio will be bleeding. Sometimes it takes half a decade for the investment to break even. And the investor would already lose out to inflation too. For nothing. 

What a pain. 

An average joe with just USD 500 spare cash a month also must diversify. Playing the all-in strategy means you go big or go home. Buffett can do concentrated positions because he has the holding power, but truth is most people do not have such holding power. Choices are needed in certain occasions, and if one asset class is down, people do need another asset class to cover back the losses. And that is just how reality works. 

A lot of flexibility is what helps the average individuals 

This is where CFD trading becomes very appealing to many. Flexible, small and quick – just like a ninja.  

Make money no matter the market is bullish or bearish 

In CFDs, you can choose to bet if the market is going upwards or downwards. If the market is crashing, you can simply choose to follow the trend and short the market, making money when everyone else is bleeding.  

Fast in fast out equals healthy cashflow 

Most CFD traders practice intraday trading, and positions would be closed quickly to avoid overnight risks. Such practice also allows for healthy cashflow for a regular person. There would be no necessity to have your USD 500 cash stuck for extended periods of time.  

Lower barrier to entry with leverage 

With leverage of up to 500:1, CFDs also offer a lower barrier to entry – you only need to put up a small sum to gain full market exposure. 

With a starting amount of USD 500 and leverage of 500:1, you can open positions of up to USD250,000, which can potentially amplify your profits. With Warren Buffett’s methods, you will have to earn the spare cash of USD250,000 first, which is not really viable to many. 

Diversification of markets you can expose yourself to 

You can gain exposure to forex, commodities, bonds, shares, indices and ETFs via CFD trading. It is easy to hedge or diversify with CFDs. 

So, is Warren Buffett lying? 

Perhaps from his own perspective, Buffett is not lying per se. But his methods are unrealistic and cumbersome for anyone without USD 1,000,000 in cash lying around waiting to be invested.

Once a while, everyone would want a cup of latte or boba tea, travel to another country, celebrate little moments in life, and just live simple happiness. Life could feel meaningless if every single penny saved must be invested and had to be locked for at least half a decade. 

Start CFD trading with VT Markets 

With 1000+ assets being offered in the form of CFD trading, there is nothing to stop you from living the lifestyle you desire. Start your financial trading journey today! 

Open a live account 

Dear Client,

As part of our commitment to provide the most reliable service to our clients, there will be server maintenance this weekend.

Maintenance Hours :
1st of June 2024 (Saturday) 02:00 – 03:00 (GMT+3)

Please refer to the MT4/MT5 software for the specific maintenance completion and marketing opening time.

Please note that the following aspects might be affected during the maintenance:

1. The price quote and trading management will be temporarily disabled during the maintenance. You will not be able to open new positions, close open positions, or make any adjustments to the trades.

2. There might be a gap between the original price and the price after maintenance. The gaps between Pending Orders, Stop Loss and Take Profit will be filled at the market price once the maintenance is completed. It is suggested that you manage the account properly.

Thank you for your patience and understanding about this important initiative.

If you’d like more information, please don’t hesitate to contact [email protected].