Although a high rate of winning trades can be achieved by experienced traders or operators with sistem trading forex profit konsisten that allow for large drawdowns, it is extremely difficult for most beginning traders to maintain these percentages because their various errors as traders and impatience often charge A high price in most cases.
From there, you may have decided to change your focus and focus on your reward / risk ratio, thinking that as long as you could earn more on average than you lost, you would be able to make your joint operations profitable. For example, you might have been looking for a profit on each winning operation of 3 or even 4 times the amount lost on each losing operation, although it probably ends up by realizing that the problem continues because your winning trading rate fell dramatically , So that even winning operations that generated large numbers of pips were not able to not even compensate for the series of losses.
A very important concept that is not taught in many trading courses or in specialized sites is this: the rate of winning operations alone is not as important as neither is the reward / risk ratio. What really matters is what happens when you combine the two to determine the mathematical hope of your trading strategy or methodology.
What is the hope applied to trading?
In short, mathematical expectation in trading is defined as the average amount that can be expected to earn (or lose) an operator for each operation with its system, when a large number of operations are performed (at least thirty to be statistically significant ). To figure out the hope for a system, you need to know three things: your percentage of winning trades, your average profit and your average loss. The calculation is as follows:
Hope = (Percentage of winning trades * Average gain) - (Probability of losing trades * Average loss)
It is a simple equation, which however can be extremely useful in determining if a system really has the potential to provide us with long-term profits, or else it will only waste time and money. For example, having a system with a high positive expectation can be very powerful. The impact that this knowledge can have on the confidence, patience and discipline of an operator should not be underestimated.
It is easy to understand the power of hope by thinking of a casino. The casino has many games that have a small positive hope in their favor. The advantage to the casino is small enough that players can have long winning series of bets and get good profits in the short term (inspiring false confidence), but if they continue to play in the long run, the numbers are in favor of the casino Since, on average, they will get a few cents for every dollar that the player risks. The casino always outstrips the masses in the long run.
As operators, we can be like the casino as long as we maintain a high positive expectation over time.
"At the heart of any sistem trading profit konsisten is the simplest of all concepts - that the results should show a positive mathematical expectation for the trading method to be profitable."