How Successful Traders Thrive with Just 20% Win Rate

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If you want to make a lot of points in the 
market, you can have two approaches. You can  

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risk a lot of points to make a lot of points, 
or you can risk very little, but then you need  

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to be prepared for the possibility that you 
will be repeatedly wrong. And at this point,  

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I would love to tell you the story about 
a colleague of mine in the industry.

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A right old Nestor that I have a 
tremendous amount of respect for.  

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He managed a fund trading South African shares 
on a one-minute chart. Yes, it— I didn't even  

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know that you could run a hedge fund trading on 
one-minute chart in South African shares. But  

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they deployed a strategy invented by Tom Demark 
called the Tom Demark Sequential Indicator.

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However, what I found incredibly 
refreshing, ladies and gentlemen,  

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was that my friend was telling me, "You know 
what? We had a hit rate that was around the  

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20s. At times when we were on a good run, 
we would have a hit rate around 30, 35%."

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So for those of you who are not familiar 
with the percentages I'm talking about,  

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it means that they generally 
were right 20 times out of 100.

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How would you feel about trading a 
system where you are wrong 80 times  

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out of 100? Does that sit easy with you? 
Aren't you more inclined to believe those  

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glossy adverts whenever you Google 
something—those adverts that will  

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promise you a 90% hit rate or a 100% hit 
rate? Or, "With this system you'll never  

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lose." Who in their right mind would trade 
a system that is only right 20% of the time?

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Yet my friend did it, and they were wildly 
successful to the point where they said,  

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"This is it. We are not younglings 
anymore. We made enough money. Let's  

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just take our spoils and bugger off 
to sunny shores. We've done our job."