Can A Trading Strategy With A 50% Win Rate Be Successful
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| Description | As every one in trading knows, failures are a the main company, and you canat avoid them. If thatas some thing you've difficulty taking, then you shouldnat be trading. But, thereas an enormous difference between losing major on an everyday basis and losing little in a controlled trading program. You already know just that you should keep your losses small; the main element would be to keep them smaller that your average wins. Letas look at a trading strategy that creates $300 in earnings for every win and charges $200 to you for every loss. Now, if your weekly goal is $300, and if your first trade was a lack of $200, then you definitely need to make two winning trades to reach your weekly profit goal. I'd like to take this only a little farther and actually break it down for you: youave dropped $200 on your one losing industry, and on your two winning deals ($300 each) then you definitely make $600. Your net income = $400. Purpose accomplished. Now, STOP TRADING. Otherwise, youall wind up giving back the amount of money you just designed to the areas. Lock in your profits! Of course, youare not necessarily assured a week with only 1 loss. Letas look at a week that starts off with three losses. With three losses, you are now down $600 ($200 each). So you would need to own three wins that lead to $900 ($300 each). Deduct the $600 you dropped on the losing trades from the $900 you won on the winning trades, and your resulting net profit is $300. Learn further on intangible by navigating to our elegant essay. Target achieved. End trading. Wait one minute a youare saying that I will achieve my aims with a percentage of only 50%?a YES! Thatas precisely what Iam saying! Browse the example above again: you lost $600 on three dropping trades, built $900 on three winning trades, and came out with a net gain of $300. This means that you might pick a losing trade every other time and STILL achieve your regular gain objectives! I do want to stress this point again, because many professionals ignore this essential concept of setting weekly targets. They define everyday objectives, which create a massive emotional pressure, and then they deal markets when they shouldnat, and they lose. So letas just suppose for a minute that you do end up achieving a real profitable percentage of only 50%. Now, once you start trading again on Monday morning, what are your likelihood of having a profitable business? 50%! You have a one in two possibility of meeting your weekly profit target in only one, single trade! So if you DO obtain your weekly gain purpose on the first industry Monday morning, what next? Stop trading for that week! Just take it easy! It doesnat get much better than that. Remember, you will need to stick to your weekly goal and your trading strategy. Don't come into another trade after youave already reached your weekly goal; the chance that your next trade may be a losing trade is too great, and you'd be giving your money and profits back to industry. Over-trading and greediness certainly are a traderas drop, adhere to your strategies and so resist them. Now, you know that you can perform your regular gain target with a percentage of only 50%. As you improve in your trading functions, you should really be able to still meet your financial goals and improve this winning percentage as time passes.. |
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