This article is the key to understanding how the big retailers in terms of systems thinking. This is vitally crucial if you want a real success as a trader or an investor, no matter which market you choose. Once you get to understand the following 6 keys and are able to use in the development of trading systems, the wealth that comes in leaps and bounds to you and mean it. , So read this article as it will greatly benefit you choose to use this power.
1) the reliability or what percentage of time to make money
For example, do you make money in 60 percent of their investments and lose money in 40 percent of them? Although not necessary that you will earn money by winning percentage above 50 percent, and vice versa, would be better if there were greater than 50 percent win rate, if and only if, its triumphs are always greater than its loss. And thats the next key.
2) The relative size of their profits compared to losses
For example, you have designed their system for each win they earn $ 200 and each loss you lose $ 100 and not trade off only until any of these 2 targets are hit. This means for every 1 win and 1 loss, you will remain an asset of $ 100. Therefore, if the system has a reliability rate of at least 50 percent and each victory is to do that every loss you get, no doubt you will make money in the long run (not including all other costs) .
3) The cost of an investment or trade
This is the destructive force of the size of your account each time you trade. Is the cost of execution and brokerage commissions. These costs really can accumulate over many trades. Therefore, you have to take into consideration all other costs that are incurred when making the trade.
4) How often do you get the opportunity to negotiate
Now imagine holding the first three variables constant. Their combined effect will then depend on the frequency with which they trade. The results will be very different if done 100 operations each day compared with 100 routes each year.
5) Your position sizing model or how many units to trade at one time
Obviously, the amount you win or lose per share multiplied by the number of shares that trade.
6) The size of your trade, capital investment
The effect of the first four variables of your account depends significantly on the size of your account. For example, the cost of trade will have a significantly greater effect on a $ 1000 on what counts in a million dollars. If it costs $ 20 to trade, you would have reached 2 percent in each transaction in the account of $ 1,000 before youd make a profit. As a result, would have an average of more than 2 percent profit for fair trade to cover the costs of negotiation. However, the impact of these cost $ 20 becomes insignificant (ie, 0.002 percent) if you have a mind of millions of dollars. Similarly, a loss of $ 500 to decimate a $ 1000, but it will have almost no effect (ie 0.05 per cent) on account of a million dollars.
These 6 keys are vital to the success of a trader and have a high probability trade. Whether you choose to incorporate all 6 in your trading system or a single key is really up to you. However, it is crucial to test your system to see if it works. I hoped you enjoyed this article about how you can develop your own trading system high probability. I wish you good trading!
1) the reliability or what percentage of time to make money
For example, do you make money in 60 percent of their investments and lose money in 40 percent of them? Although not necessary that you will earn money by winning percentage above 50 percent, and vice versa, would be better if there were greater than 50 percent win rate, if and only if, its triumphs are always greater than its loss. And thats the next key.
2) The relative size of their profits compared to losses
For example, you have designed their system for each win they earn $ 200 and each loss you lose $ 100 and not trade off only until any of these 2 targets are hit. This means for every 1 win and 1 loss, you will remain an asset of $ 100. Therefore, if the system has a reliability rate of at least 50 percent and each victory is to do that every loss you get, no doubt you will make money in the long run (not including all other costs) .
3) The cost of an investment or trade
This is the destructive force of the size of your account each time you trade. Is the cost of execution and brokerage commissions. These costs really can accumulate over many trades. Therefore, you have to take into consideration all other costs that are incurred when making the trade.
4) How often do you get the opportunity to negotiate
Now imagine holding the first three variables constant. Their combined effect will then depend on the frequency with which they trade. The results will be very different if done 100 operations each day compared with 100 routes each year.
5) Your position sizing model or how many units to trade at one time
Obviously, the amount you win or lose per share multiplied by the number of shares that trade.
6) The size of your trade, capital investment
The effect of the first four variables of your account depends significantly on the size of your account. For example, the cost of trade will have a significantly greater effect on a $ 1000 on what counts in a million dollars. If it costs $ 20 to trade, you would have reached 2 percent in each transaction in the account of $ 1,000 before youd make a profit. As a result, would have an average of more than 2 percent profit for fair trade to cover the costs of negotiation. However, the impact of these cost $ 20 becomes insignificant (ie, 0.002 percent) if you have a mind of millions of dollars. Similarly, a loss of $ 500 to decimate a $ 1000, but it will have almost no effect (ie 0.05 per cent) on account of a million dollars.
These 6 keys are vital to the success of a trader and have a high probability trade. Whether you choose to incorporate all 6 in your trading system or a single key is really up to you. However, it is crucial to test your system to see if it works. I hoped you enjoyed this article about how you can develop your own trading system high probability. I wish you good trading!
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