There is a very simple formula for absolute guaranteed long term profitability when trading Forex: Wins must be bigger than losses and the system used needs to win just half of the time – when this is consistently achieved your profit stream is guaranteed.
It’s a simple proposition but one than can be difficult to grasp, so in this week’s video I will illustrate this in a simple exercise that you can do at home at no cost– all you need is paper, a pen and a coin! Its an exercise my mentor taught me many years ago and it has stuck with me ever since.
Click here to get started:
Note there is no marketing within the video - hopefully you will find it of interest.
Great additions guys and thanks - the idea behind the video was to show a simple illustration as to why Risk Reward Ratio is important.... having a 2:1 R:R was pretty obviously shown by the amounts used in the illustration....
and having a 2:1 R:R covers any broker spread and commissions...
The whole point of the video is that if you have a good R:R it means you only have to win half the time....
90% retails traders are losers because they cant overcome psychological hurdles (ie system chasing, lack of consistency etc) - people dont lose at trading because of commissions and spreads - but thats a lesson for another day.
Also the illustration was initially given to me by a trader who has since been verified and ranked as 2nd highest performing trader in the world by Barclay hedge for several years running, so I would hope it has some substance...
As this thread is about risk and risk ratio I would like to share with you a link to our forex risk calculator. It's a free tool and allows you to calculate risk per trade and risk ratio as well. Here is the link: https://www.forex21.com/forex-risk-calculator-in-lots
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Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
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