It is not whether you win or lose, it is how you play the game.

Grantland Rice


I’ve been trading for almost 15 years now and I am still amazed at how profitable a trader can be with a losing winning percentage.

In my live Mentorship Program–that I hold 4 times a year for 8-12 weeks– I’ve developed a strict, rules based (i.e., mechanical) trading system that we use to trade an options account.  The same amount of money is risked for each trade ($3500) and we purchase the same option contracts (at least 3 months of time and one strike price in the money). We trade this account in conjunction with our studies as a way to educate ourselves on the importance of managing our emotions in an environment of uncertainty.  The trading account also helps each person develop his or her own process for determining entries and exits.  Since the trading account is purely mechanical it is up to each trader to develop additional “art of the chart” parameters that he or she deems appropriate for their personality.

The trading system is really an exercise in discovery, for trading, as all successful traders eventually find, is 100% psychological.  The “technical” charts are merely used as a tool to manage the future, not predict it.  Therefore, the charts serve as a way to manage what is more often than not the unbridled emotions of the traders who are left on their own to interpret random price action from a wide variety of perspectives, none of which are right or wrong.  They just need to be managed.

In our last two Mentorship Program sessions, the trading system—we call it a process–was similar; the outcome, however, was quite different as one account produced a significantly higher return than the other which, of course, is attributed to random market conditions since the same system was applied in both.  But that is where the differences end and the similarities become glaringly obvious.  Take a look.







What is obvious in each account other than a big winner (“largest winning trade”)?  The percent profitable in each is very low.  The former is slightly above 50%; the latter slightly above 40%.  Even with low winning percentages both accounts were profitable.

How will the account end in the coming quarter?  Who knows? But one thing successful traders do know is that it does not matter the number of winners versus the number of losers.  What matters is how you manage the charts.




There are no comments yet. Be the first and leave a response!

Leave a Reply

Wanting to leave an <em>phasis on your comment?