of the win and what is the average size of the loss. Recommended Article: Becoming Successful in Forex Trading With Very Little Math Knowledge. So the size of the win was double the size of the loss and we made good pips. In the first example, average size of the win was 20 pips and the average size of the loss was 10 pips. So if our algorithm can make 200 pips with a stop loss of 20 pips, you only need to have a winrate of 30 to make profit. With a take profit of 20 pips, in 100 trades the algorithm should be able to make 1020 pips and it should lose 490 pips. In this case, in a series of 100 trades, the algorithm will make 5100 pips and lose 980 pips producing net 4120 pips. What is more important is the average size of the win and the average size of the loss.
So on net you have 530 pips profit with this algorithm. If your average win is bigger than your average loss you will be profitable with even a winrate of 30 and even. If the average size of the win is equal or more than the average size of the loss we only need a winrate of 50 to breakeven. In a series of 100 trades, we should win 51 trades and lose 49 trades.
You cannot avoid losing in forex. As long as the algorithm has a Reward/Risk ratio greater than 1, you only need to win 50 of the time. As you must have seen by now, we cannot depend solely on the winrate. We also call this, reward/risk Ratio. Let me explain it in detail below. In 10 trades, you win 3 trades and make 600 pips and lose 7 trades (140 pips). Recommended Article: Learn to Trade Forex for a Living. We cannot depend solely on the winrate. The most sistema di forex account aziendale important thing for a trading system is the reward/risk.
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