So, you’ve got a stock-picking strategy, and it’s only right 60% of the time (we don’t guarantee it, but our daily picks run 60-83% accurate, as seen on our results). Yeah, 60 is not exactly a number you want to tattoo on your chest, but here’s the secret: you don’t need to bat 1000 to make money in the market. In fact, a 60% win rate can get you that fat stack of tendies—if you know how to manage risk like a pro – and it’s how the algos win.
Enter the real MVPs of trading: stop losses and trailing stops. We have talked about it before, but you really should be paying attention. Think of these as your safety nets, because no one likes falling flat on their face (or their portfolio). I’ll walk you through how to use these tools, break down some examples that even your goldfish could understand, and show you why risk management is the only thing standing between you and working the Wendy’s drive through.
The Basics: Why 60% Isn’t as Bad as It Sounds
Let’s get one thing straight: 60% accuracy means you’re right more than you’re wrong, and in the world of trading, that’s a fucking win. But the real trick is not letting those 40% of losing trades wipe out the gains you made on the other side. That’s where risk management comes in.
Here’s the simple math of it:
If you’re winning 60% of your trades, you need to make sure that your winning trades make more than your losing trades lose. Don’t believe me, well luckily we maths better than the math club.
The Power of Stop Losses: Don’t Let a Loser Turn Into a Dumpster Fire
A stop loss is basically a button that says, “If this trade turns into a horror show, get me out before it gets ugly.” Set a stop loss at a certain price, and it’ll automatically sell your position if the stock drops to that level. It’s like your dad getting those cigarettes when you were a kid—he cut his losses before things got worse.
Example: Let’s Say You’re Trading XYZ Stock
- You buy at $100 per share, hoping to sell it at a profit.
- You set a stop loss at $90. If XYZ drops to $90, your stop loss kicks in and sells, limiting your loss to 10%.
Sure, losing 10% isn’t fun, but it’s way better than holding on until it hits $50 because you kept telling yourself “DiAmOnD HaNdS” as you ask your mom for bus money. It’s called risk management, not “I-really-hope-this-bitch-turns-around” management.
Trailing Stops: Letting Winners Run Without Letting Them Run You Over
A trailing stop is like a stop loss, but with a little more finesse, updating faster than emails on a Friday. Instead of setting a hard price point, a trailing stop moves up with the stock’s price, locking in gains as the stock climbs. It’s like having a guard dog for your profits.
Example: Riding the Wave with XYZ Stock
- You buy XYZ at $100.
- You set a 10% trailing stop. If the stock rises to $120, your trailing stop adjusts to $108.
- If XYZ then drops back down to $108, the trailing stop kicks in and sells, locking in an 8% gain.
With trailing stops, you give the stock room to breathe while protecting your gains. It’s like saying, “I’ll let you run, but you’re not taking me down with you.”
Putting It All Together: Profitability with a 60% Win Rate
Here’s where it gets interesting if you can be right 60% of the time, and here’s some math for you apes (or if you’re a blind faith kinda person well…you can just stop reading here)
Hypothetical Trading Strategy with XYZ Stock
- You take 10 trades, and 6 are winners, 4 are losers.
- For the winning trades, let’s assume an average gain of 15%.
- For the losing trades, you’ve got your stop loss set at 10%.
The Math: Making It Work
- Winning Trades:
- 6 trades with 15% gains each
- If you invested $1,000 in each trade, that’s $1,000 x 6 trades x 0.15 = $900 in gains.
- Losing Trades:
- 4 trades with 10% losses each
- If you invested $1,000 in each trade, that’s $1,000 x 4 trades x 0.10 = $400 in losses.
- In dollar terms, that’s $900 – $400 = $500 net gain on those 10 trades.
Even though you’re only right 60% of the time, you walk away with a 5% profit on your trades—or in this case, an extra $500 in your pocket. That is on pretty conservative estimates by the way. If you can do that 5% return on a monthly basis you are quite literally beating the S&P 500 on average.
Tips for Risk Management (That You Shouldn’t Ignore)
- Set Your Stop Losses Before You Buy: Don’t wing it. Have a plan before you even enter a trade. Decide how much pain you’re willing to take and set that stop loss.
- Use Trailing Stops for Volatile Stocks: If you’re trading something that moves like a caffeinated squirrel, a trailing stop is your best friend. It locks in gains as the stock climbs and protects you from those sudden drops.
- Don’t Move Your Stop Losses Just Because You’re Hopeful: Seriously, don’t do it. Moving your stop loss further away because “you think it’ll bounce back” is like hitting snooze on your alarm clock—sure, it feels good for a minute, but you’ll regret it when reality hits.
- Our Premium Service Makes It Easy: Too lazy to figure out where to set your stops and trailing levels? No problem. Our premium version gives you recommended stop-loss levels and trailing loss percentages for each stock, so you can stop guessing and start winning. It’s like having a trading coach without the motivational posters.
The Bottom Line: You Don’t Have to Be Right All the Time to Win
Here’s the truth: Being right 60% of the time is more than enough to make money—if you’re smart about managing your risk. Use stop losses to cut off your losers before they burn your entire portfolio, and use trailing stops to protect your gains without choking off your winners too early.
Remember, the stock market isn’t about being right all the time—it’s about not losing big when you’re wrong. Nail that, and you’ll be miles ahead of those dumb dumbs buying NFTs.
So go on, set those stops, take those trades, and keep the losses small. You might just find yourself making money even when you’re wrong more often than you’d like to admit. Time to musk up degenerates. May the tendies flow, and the Sex Panther™ be potent.