Hey trader,
I’m not much of a sports fan.
I’ve had my seasons of following teams and going to games, but somewhere along the way the games themselves stopped holding my interest.
The statistics, though, are a different story.
I don’t watch the numbers to handicap a game or place a bet.
I watch them because they teach one of the most counterintuitive lessons in trading: being right is overrated.
Here’s why.
The best in the world fail more than they succeed
Look at any sport and you’ll find the same pattern. The greatest players of all time, the ones we consider the best to ever play, are wrong more often than they’re right.
In the NBA, the league average field goal percentage is around 47%. In the NFL, only about 40% of possessions end in points.
In Major League Baseball, a career batting average of .300, getting a hit three times out of ten, is good enough for the Hall of Fame.
This year’s FIFA World Cup, shots on goal are converting at a dismal 10 to 12%.
The best of the best, across nearly every sport, fail more often than they succeed. So how do they end up on top?
Because attempts don’t equal outcomes. A 10% conversion rate can still win a championship.
A 30% batting average can still get you into the Hall of Fame. And in trading, the same logic applies.
It was never about being right
Trading success isn’t a matter of being right more often than you’re wrong. It’s a matter of probability, reward-to-risk, and net outcome.
From our trading session on Thursday, I mentioned that I like to take trades with low win rates but high reward-to-risk ratios.
That idea makes most traders uncomfortable.
We’re wired to want to be right, and a system that doesn’t win even half the time can quietly wear down a trader’s discipline, even when the math says it’s working.
Here’s the math.
If your reward is twice your risk (a 2:1 reward-to-risk ratio), you only need to be right 33% of the time to break even.
Win 35% or more, and you’re profitable. That’s before factoring in stop adjustments or early exits based on trade signals.
Now picture a trade targeting $200 in reward while risking $100, needing only a 33% win rate to break even, but actually winning 40% of the time.
Next, imagine that on the losing trades, price moves in your favor first, letting you systematically trail your stop up and cut your average risk to $50.
That 40% win rate on a 2:1 setup just became a 40% win rate on a 4:1 outcome.
Run the numbers: you’re winning $200 on 40% of trades and losing $50 on the other 60%. Over 100 trades, that’s $5,000 in net profit, or $50 per trade on average, from a system that’s only right 40% of the time.
Some of the most successful traders in the world, past winners of the World Cup of Trading, have built seven-figure returns from starting stakes as small as $10,000 while winning only 30 to 40% of their trades.
High accuracy isn’t the goal, and it can even work against you
I’ve known traders and systems that win 80 to 90% of the time and still lose money overall.
A high win rate can absolutely be profitable, but I don’t know a single professional trader operating above a 67% accuracy rate over the long run.
Larry Williams traded around 35%. Peter Lynch was closer to 60%.
Bill Lipschutz’s number isn’t public, but by most accounts it sits below 40%.
Learning to manage trades and stay profitable while losing more often than you win is arguably the real skill in this business.
Whether you’re a top trader winning 40% of the time or a top NBA scorer converting 46% of your shots, your success rate alone doesn’t determine your outcome.
Reward, risk, and how you manage both matter more.
So here’s the real question: wouldn’t trading feel a lot easier if you knew you didn’t have to be right to make money?
Next time you see me in the trading rooms, watch me run the numbers on probabilities and reward risk, you will find that the best trades aren’t the ones that I expect to be right more than 60% of the time.
And, maybe consider the lesson from these sports and trading icons: Stop trying to be right. Start trying to be profitable.
Because at the end of the day, they’re not the same game.
Blake Young
Senior Market Strategist, TheoTRADE
