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How come the losing percentage of traders is really high?

Posted By Scott Philips On Wednesday, December 21st, 2016 With 0 Comments

There are a gazillion forex trading strategies out there. How come the losing percentage of traders is really high?

To trade successfully you need (and this is all)

1) A system/process/procedure for selecting, managing and exiting trades. That system could be objective with no discretion or latitude, or there could be quite a lot of discretion within a wide framework, but it must be a system with repeatable results.

2) That system must suit your personality

3) That system must have an edge!

4) You must keep correct records and revisit them regularly to incrementally optimise your systems

5) You achieve your financial goals through position sizing.

Many sold systems are either not an edge or used to be an edge and no longer are. It is difficult to know if a system fits your market beliefs and goals before you learn it.

Also, if you even make 1 mistake in 20 trades you will reduce the performance of most systems to be negative. Most professional systems will generate between .1 and .25 expectancy (on average each trade generates between .1 and .25 times the unit of risk, which for most systems would be between .5% and 1.5%). So once every 20 trades you make a mistake costing yourself 1R (unit of risk), you cost yourself .05R per trade. If on average you only make .1R per trade then your mistakes are costing you half your profit. If you don’t monitor your own mistakes and your system performance as well, it is difficult to ascertain if you are going through a rough patch for the system (all systems have drawdowns) or just trading like an idiot.

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