When we are trading the forex market or other markets, so we often get a storyabout a variety of strategies, be it management of public money which requires that the average profit of more than average loss per trade. indeed very easy toassume that the general advice is correct. However, if we re-examine more deeplythe relationship between profits and losses, it is clear that those ideas may need to be adjusted again.
Ratio Profit - Loss
Ratio of profit - profit and loss refers to the size of the average when comparedwith the average size of trading losses which we have done. For example, if theexpected profit is $ 900 and expected loss is $ 300 for a particular trade, the ratio of profit - loss is 3:1 - $ 900 divided by $ 300.
At first, people will agree with this recommendation. After all, should not the potential losses that can be kept as small as possible and any potential profits tobe bigger? The answer is, not always. In fact, this general section of this advicecan be misleading, and may cause a threat to your trading account.
While the other suggestions have earnings ratio - a minimum of 2:1 or 3:1 loss at each open trade position is more-simple because it does not consider thepractical realities of the forex market (or other markets), individual trading style andthe average profitability of individual per-trade-factor (appt), also called statisticalexpectations.
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