Does Perfect Setup Always Lead To Profits
In this post, I am going to discuss about one email that I received from one of our fellow traders a few days back.
Below is the email content:
Thanks for your reply, anyway do you notice any strange behavior with the market recently? I just lose 50 USD with the NZD / JPY yesterday nitez, tot my analysis was correct but turned out to be wrong.
The purpose of talking this topic today is to let you know that the situation above is pretty common among traders even for experienced traders like me. To some new traders, they might think that the strategy that they are using is not good enough and they started to look for another strategy to use.
In fact, I have emphasized a lot that there is no strategy on earth that wins 100% of the time. This is mainly due to the volatility of the market at times which causes the market to move strongly. However this is one thing that we traders cannot avoid or do anything about. So my advice to all of you is to stick 100% to your trading system (must be a working and reliable system) and you will find that you are making a profits at the end of every month.
If you take a close look at the performance report of my strategies, you will find that the winning percentage for the break the bands strategy is 77.8% while the winning percentage for my 6 strategies that are taught in the Forex Mastery Course is 85.7% for the month of October 2013.
Since it is not 100%, it means that I do still have some losing trades at time where I am trading 100% according to my trading strategies. Therefore if you are planning to become a full time trader, you must be able to accept the fact that losing is simply part of the game.
All you have to do is to look out for the next trade to win back the money that you have lost. As long as your strategy is solid, you will be able to make money from trading every single month without fail even though they do not win 100% of the time.
Let’s take the Break The Bands Strategy for instance, with a 77.8% winning accuracy, this strategy itself has made 300 pips (equivalent to $3,000 if you are trading 1 standard lot per trade) for the month of October 2013. The key to successful trading lies in the risk reward ratio of your strategy and definitely the strategy must have a decent winning percentage.
If you have been reading my blog, you should have seen this illustration before.
Assuming that you have a strategy that wins 50% of the time and it has a risk reward ratio of 1:2. Let says that you trade 10 trades every month with that strategy, you will be winning 5 of those trades and losing 5 of those trades as well.
Assuming that your stop loss per trade is set at 30 pips and you take profits at 60 pips.
5 x 60 = 300 pips Profit
5 x 30 = 150 pips Loss
In total, you are still making 150 pips for a strategy that wins 50% of the time. From this example, you can see the power of having a strategy with high risk reward ratio.
So for those of you who has a reliable strategy on hand, I strongly advice you to trade it with discipline and you will definitely be able to make profits from your trading every month without fail.