A High Win Rate Is Good for the Soul

Balancing Profit Potential and Emotional Comfort in Trading

Here’s something that will make you think…
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​“The strategy with the best profit potential isn’t always the best one to trade”
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​Huh?!
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Why would you not choose the strategy with the biggest profit potential?

Because… it’s way harder to stick to a strategy that has a low win rate than a high one.
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Put yourself in this position:
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​Strategy A:
​You’re up 10k and have green every day since you implemented the strategy.
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​Strategy B:
​You’re up 11k but have had long streaks of red. It’s the big winners that have made you green.
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Most traders are going to have a much easier time trading strategy A.
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Nice and steady equity curve climb, no real stress.
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Strategy B on the other hand introduces doubt, maybe you question the strategy during periods of loss.
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Tough to stick it out.
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Now, if strategy B was yielding double the returns of strategy A, you’d rightly argue that B was worth the extra stress right?
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And I’d agree.
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But if B was only yielding a bit more…
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Wouldn’t you just take the slight discount of strategy A for an easier ride?
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You probably would.
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You’d choose to make a bit less cash for a smoother curve.
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Let’s use Chat GPT to illustrate the point.

  • Strategy A has a 70% win rate and a risk vs reward ratio of 1:1
  • Strategy B has a 30% win rate and a risk vs reward ratio of 4:1

On paper, strategy B should be slightly more profitable over enough trades.
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This is the typical equity curve according to Chat GPT:


It’s a nice equity curve at a glance, with no real nasty drawdowns.

But you had periods of almost 150 trades where you made nothing…

If you’re trading once per day that’s 7 months of chugging away with nothing to show for it!

Vs strategy A…


Very smooth, no drawdown or stagnation as you’d expect from a high win rate strategy.

Way easier to chug along getting steady green trades each week…

Ok, so I appreciate we’ve overlooked a few real-world trading things here with this sample.

You can’t precisely predict a strategy’s profitability, markets change, we change…

But for the sake of illustration, you can see how even if you had a statistically superior strategy, the human brain craves the less profitable smoother ride.

So what does this mean for us screen-based retail guys?

I think the big takeaway here is this…

When you are building new strategies and playbooks, always think to yourself.

“Will I be able to stick this one out when the going gets a bit tough?”

Because, it might be better to create something with a higher win rate, and a lower RvR but you get to sleep easy at night.

Translated to your trading, that might mean more ‘A to B’ trades. Bank the singles and doubles.

Keep the cash flowing and save the home run swings for when it really matters.

Or do both in parallel…

Have a ‘steady eddy’ strategy that keeps things ticking over and have a home run setup that takes big swings…

There’s no right or wrong way to trade the markets, you’ve just got to find what suits and works for you.