![]() So if you are going to use a high reward to risk ratio like 3 is to 1, just remember that you can easily lose multiple trades in a row because the win rate of the strategy will go down. Just remember, that the win rate goes up if the reward to risk ratio goes down, and win rate goes down if the reward to risk ratio goes up. Even if your heart rate goes up while taking trades, you are not going to blow up your account if you book more profits than your potential loss with a decent strategy. Imagine if you simply use a proper money management technique with a decent trading strategy, you are almost guaranteed to make a profit as long as you take trade with your brain and not with your emotions. Price has a higher chance of making a big move in the direction of the trend. But in this experiment, we made a profit and we didn’t even consider the trend direction while taking the trades. Now obviously, you are not going to make money in trading in the long run by flipping a coin. ![]() But then, the 10th and last trade that was taken on CAD JPY, made a profit, so in the end, we are up in profit without even using a proper trading strategy. ![]() But then the GBP CAD trade was a loser, and the total profit was 0. But then the trade on AUD CAD made a profit, and because of the double profit, instead of breaking even, we are back in the profit. Unfortunately the trade on EUR CAD was lost, so we are back in total loss. But then the trade on EUR AUD was lost, but since we risked half the amount than the potential profit, the total profit was back to breakeven. Now we are no longer in a loss and are up by 1 trade in total. Luckily, the next trade on the USD CHF pair also made a profit. Since the profit target was set 2 times the distance of the stop loss, we made a 2 times more profit. But in the next trade which was on USD CAD, price did go in the entry direction and hit the profit target. So far we are down 3 trades and that’s not a good start. Price hit the stop loss in literally the next candle. The next trade on the GBP USD pair was also lost. The price went straight through the stop loss. This is the kind of mentality you need as a trader which many beginners lack at the beginning. The first trade I took on the Euro USD pair was lost. So if Bill the business man continues to book double profits everyday, he will always make money in this business even when his win rate is only 40 percent. But since he sold 40 apples for twice the price, Bill the businessman made a total profit, because 40 apples worth $2.38, equals $95.2, and if we minus the $71.4 bill the businessman lost from not selling the 60 apples, total profit will be $23.8. 60 apples are worth $71.4, which means bill the businessman made a loss of around 71 dollars. Because if he only sells 40 apples out of 100, 60 apples become worthless at midnight. But if he sells 40 apples out of those 100 before midnight for $2.38 each, in other words for twice the price, Bill the business man will make a guaranteed profit before midnight. If 100 apples are worth $119, 1 apple is worth $1.19 for bill the business man. So if he sells the apple for twice the price, bill the businessman will make some profit. He has somehow observed that there is a high chance that people will buy 40 percent of his magical apples before midnight. ![]() So why would Bill the businessman risk his money in such a risky business? well well well, bill the businessman is a smart businessman. Obviously, not everyone is going to buy all of his magical apples every day, some of them will become worthless at midnight. Since the apple will become pretty much worthless at midnight, his goal is to sell all the apples before midnight. But here’s the twist, if he can’t sell all the apples before midnight, he will have to pay for the remaining apples from his own pocket. Bill the business man magically gets $119 worth of fresh apple stock in the morning for free. He runs an apple store where apples degrade in quality as time passes. For example, let’s say there is bill the business man. You see, trading is a simple game as long as you see it as any other business.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |