Forex Trading in Success

What I learned from stock trading and transferred across to forex trading was you HAVE to be selective in your trading. You have to realise most trades are trying to lure you into losing money. You need to do one of two things when it comes to trading in any time frame and any markets:

You a win with a less than 50% correct system IF you set your-self up to snag some really big winners in the process. This is what trend following does. It kind of says I might only be right 40% of the time. But I cut my losses fast and let the winners ride and I occasionally snag a huge winner. So if your looses are at say 15%, your average winner is 25% but you get the odd 70%+ winner you have a great winning system.

It’s a system that many people do not like. Why? Because most people prefer high % winning trades, the need to be right rather than letting a few big winners make the most of their gains. It’s human nature. A Dr. doesn’t get paid to be right 40% of the time….nor would we expect it. Imagine getting on a plane flight and being told your pilot is only “right” 40% of the time. “Get me off now” LOL

So the other way to make money in trading is to go for systems that have a higher degree of accuracy but a lower win/loss ratio. So you have a system that wins 70% of the time but when it wins you make $1. When it loses you lose $1. Still a great system. I mean if you could trade such a system would you do it? Of course you would? Are you going to have losers? YES. I said it was 70% winning. So it loses almost 1/3 of the time it trades. But you know the odds are over time you will come out ahead with such a system.

70% win ration is about as good as systems get. There are many “vendors” (criminals) who say their system is 90%, 99% accurate which technically might even be correct but in order to get such high % winners what they leave out is the fact that to get such ridiculous % of winners their win/loss ratio is reversed. In other words when you win you win tiny. When you lose you lose much larger. They know many amateur/new traders are after high % winning trading systems so they oblige but it’s not the way to trade professionally.