Strike rates
I know I have got all excited about strike rates recently but….. I must insert some an important caveat when addressing strike rates in general, not all strikes rates are created equally.
If I get a monkey, I can give him a set up that gets him a 50% strike rate, not hard. With the same monkey I can increase this to 80-90% by tweaking some parameters. There is a simple trade, which requires more than monkey like intelligence, that will get you all the way up to an incredible 99.9%! But none of these rates tell the full story. All can be profitable or unprofitable depending on the result attached to that strike rate.
If I had a strike rate of 10%, you may consider me an idiot, but if I won 11 times my stake 10% of the time I would still be profitable. If I won 99% of the time but lost 100% of my trade value I really would be an idiot! Knowing what you have won and lost and how often is critical to working to a good trading strategy. It’s no good scalping for one tick if you loose a whole bunch when the market goes against you, despite having a decent strike rate. You will lose.
Obviously, nirvana is a high strike rate and big win. But this is generally something that does not goes hand in hand in any market, whether sports or financial. But knowing the key stats will tell you something critical, how much you can afford to lose!
For example, if you win 70% of the time, you know immediately where you should cut your losses. With a 70% strike rate you can afford to lose twice as much as win on average and you will still be profitable. Having the loose leash of twice your average profit as a upper limit to losses will immediately change the way you trade. But, of course, each style, strategy and personality has their own rates. Knowing and understanding them is the first step to successful trading.
Category: Using Bet Angel
