What‘s uniquely interesting about the markets is that they can reward “bad trading” for a prolonged period of time. It’s called blind luck. Lucky amateur traders might think they “got it”. They trade large positions, long and short, and they rake in profits. But sooner or later, these wins are transferred to calculated traders who might have not collected as much during these periods but played the same old consistent long-game while calculating their risk and reward. In the long run, you can’t win the game of day trading without accurately assessing risk and reward. Another way to think of risk and reward is cost and benefit analysis. Risk and reward is calculated on each trade, and on large numbers. In day trading, your “win rate” can be low, but your positive net pay off can be more than your losses; a net profitable scenario. Again, you need to be a long term thinker, focusing on your profits and losses over time, not just on the number of winning and losing trades.
