Hello! Title loud, and most importantly - the relevant content. What is the main secret of forex? Why do some traders make, and others lose? I can not see all the reasons for the failure, but will tell you about the main. Anyone who is not sure of his trade, I advise you to read.
The reason for the failure of the majority of traders - the lack of money management. And do not think that if you are trading a constant volume or you worked as an advisor, you can pass. No! Pay attention to the risk in the transaction is the risk (the amount of money you will lose). Many traders do not know what I mean :-). I advise you to follow the link above and read what is risk.
The main forex secret has long been known.
I will hold a small but significant experiment. Compare the conditioned novice trader and the experienced trader conditioned in the same conditions. Let's see what happens!
Beginning. Suppose he found out yesterday about stock trading and decided to try his hand in this matter :-). About the MM does not know the average risk of 5% of the deposit.
Experienced. He not just losing the deposit, filled cones. Risks 1% of the capital.
For example, consider a random process, ie, the probability of a profitable trade is approximately equal to the probability of losing money and is 50%. The ratio of the risk / profit = 1/1. This example seems to work without a strategy, when trades are entered randomly. That's what sells the majority of novice traders.
Example 1. The risk does not exceed 1% of each transaction. An initial deposit of $ 10 000. The duration of 5 years.
The main forex secret has long been known.
I will hold a small but significant experiment. Compare the conditioned novice trader and the experienced trader conditioned in the same conditions. Let's see what happens!
Beginning. Suppose he found out yesterday about stock trading and decided to try his hand in this matter :-). About the MM does not know the average risk of 5% of the deposit.
Experienced. He not just losing the deposit, filled cones. Risks 1% of the capital.
For example, consider a random process, ie, the probability of a profitable trade is approximately equal to the probability of losing money and is 50%. The ratio of the risk / profit = 1/1. This example seems to work without a strategy, when trades are entered randomly. That's what sells the majority of novice traders.
Example 1. The risk does not exceed 1% of each transaction. An initial deposit of $ 10 000. The duration of 5 years.
Click to enlarge.
The report clearly shows that the trades were 50.66%, about half. By the way, for the first year equity steadily goes up, although no strategy just is not (hello to all who test the system for 3 months). Returning to the test: the drawdown is quite high even at the risk of 1%. Let's see what happens if you increase the risk of up to 5%!
Example 2. The risk does not exceed 5% of each transaction. An initial deposit of $ 10 000. The duration of 5 years
The report clearly shows that the trades were 50.66%, about half. By the way, for the first year equity steadily goes up, although no strategy just is not (hello to all who test the system for 3 months). Returning to the test: the drawdown is quite high even at the risk of 1%. Let's see what happens if you increase the risk of up to 5%!
Example 2. The risk does not exceed 5% of each transaction. An initial deposit of $ 10 000. The duration of 5 years
Click to enlarge.
An increase in risk up to 5%, account completely drained. Number of trades about 50%, half. Trading conditions remained the same, but the increased risk of 5 times entails the loss of all the money.
In my opinion, this example is very revealing! Risk - the most important variable, which is worth special attention. What conclusions can we draw? If you do not exceed the risk to 1%, even without a trading system, you can save your capital. If strongly overstate risk chasing big profits, then the probability of sorry outcome is greatly increased.
Risk Control - the main secret of successful forex traders.
What else can I add? The trader does not exceed 1% of the risk, even for a losing trading strategies are likely to retain their money. Therefore, you can not be afraid to experiment and try different trading methods. This kind of protective barrier that will preserve capital in any situation.
Many people forget about the risk, do not pay attention to it, which is sad ... Even profitable strategy using, you can lose money. Blame - uncontrolled risk!
Do not forget about the psychological moment. How behaves trader risked 30% of the depot and the 1%? The behavior differs dramatically! 1% will not have any special significance to the capital, will always be an opportunity to try again, to open a new deal. A 30% - Trader destroys nerves speed of light :-). Needless to say, neither of which the adequacy and equanimity can be no question!
I advise you to read further useful materials on money management.
About errors:
"Irrefutable proof of principle of the Martingale loss!"
"Blocking positions - trick for idiots!"
Increase profits by capital management:
"Pyramiding increases profit?!?!?! Part 1."
"Pyramiding increase profits? Part 2: An effective way to wealth management. "
Do you know other secrets in the forex? Can you share your experience? Write in the comments, readers will render a great service!
I say goodbye to you! New and useful materials plan a lot, continue to share their secrets of working on Forex, so subscribe to blog updates in the form below.
I wish you a successful trading while!
An increase in risk up to 5%, account completely drained. Number of trades about 50%, half. Trading conditions remained the same, but the increased risk of 5 times entails the loss of all the money.
In my opinion, this example is very revealing! Risk - the most important variable, which is worth special attention. What conclusions can we draw? If you do not exceed the risk to 1%, even without a trading system, you can save your capital. If strongly overstate risk chasing big profits, then the probability of sorry outcome is greatly increased.
Risk Control - the main secret of successful forex traders.
What else can I add? The trader does not exceed 1% of the risk, even for a losing trading strategies are likely to retain their money. Therefore, you can not be afraid to experiment and try different trading methods. This kind of protective barrier that will preserve capital in any situation.
Many people forget about the risk, do not pay attention to it, which is sad ... Even profitable strategy using, you can lose money. Blame - uncontrolled risk!
Do not forget about the psychological moment. How behaves trader risked 30% of the depot and the 1%? The behavior differs dramatically! 1% will not have any special significance to the capital, will always be an opportunity to try again, to open a new deal. A 30% - Trader destroys nerves speed of light :-). Needless to say, neither of which the adequacy and equanimity can be no question!
I advise you to read further useful materials on money management.
About errors:
"Irrefutable proof of principle of the Martingale loss!"
"Blocking positions - trick for idiots!"
Increase profits by capital management:
"Pyramiding increases profit?!?!?! Part 1."
"Pyramiding increase profits? Part 2: An effective way to wealth management. "
Do you know other secrets in the forex? Can you share your experience? Write in the comments, readers will render a great service!
I say goodbye to you! New and useful materials plan a lot, continue to share their secrets of working on Forex, so subscribe to blog updates in the form below.
I wish you a successful trading while!
