Thursday, 13 August 2015

Risk Reward Ratio-Secret to Success in Forex Trading

You may have a lot of trading indicators.
You may tried a different kind of trading strategy and trading system.
Believe me, you can't win the game if you just rely on those indicators, those system or those strategies.

Than a big QUESTION comes out?
HOW I CAN WIN THE GAME?

First:
You need an indicator's (at least two, not one), trading strategy or trading system that can produce a good entry point. Find it that match with your criteria, like your daily activity, your balance or anything else. In this blog i introduce a trading strategy, i called it MARS (Moving Average Resistance Support). This strategy based on MA and Resistance Support with a price action as a catalyst.

Second:
You must use, at least, 1:2 risk reward ratio. Why?

Let assume you used 100 pips as your target in each trading. So, your risk must me 50 pips.
Back to the first step, you need a good entry point, this mean that your indi must have at least 50 percent ratio of wining trade. If your indi (strategy or system) met this criteria the scenario will be like this after you trading 100 times.

Win trades : 50 time.
Win pips = 50 * 100 = 5000 pips.

Lose trades : 50 times.
Lose pips = 50 * 50 = 2500 pips.

You got it, aha, after you trade 100 times, even if your indi (strategy or system)only  give you probability to win the trade just 50 percent (0,5) you still can earn 2500 pips.

Enjoy your trade!

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