Any person who has decided to engage in speculation on the financial markets in the first place trying to find a profitable system for the job. The statistics in this industry tells us that about 95 % of traders lose money on the stock exchange, and only 5 % of the total mass in the end make money. In the currency market, the trader has to deal with a lot of leverage. Lose capital in such conditions is very simple. And there is a break-even strategy forex? Is there a system that guarantees a profit?
Of course there is! The gist of it is very simple - do not open any positions. The only way to avoid losses. Well, if you do decide to be active and to take on different kinds of risks, the loss-of forex strategy is not out of the question. The risk of incurring losses is always present. I would like to make a reservation at once that in this topic, we do not consider these types of operations, such as arbitration. Market risk in such strategies can be practically zero, but there are additional specific risks, which are beyond the scope of this article.
Thus, the operations in the foreign exchange market, which can ensure profitability, significantly higher than the deposit rate, always involve risk. The relationship between risk and return - is directly proportional to, but not always linear. The fact that the break-even forex strategy does not exist, should not trample beginners disheartening. Since there is good news - the risk can be managed.
The size of the position - around the head.
Yes! That is - to manage! Completely eliminate the risks we can not but choose the strategy in terms of risk/reward is quite real. A key feature of any trading system is the expectation (EV) based on one contract or lot. This value shows what the average result for each transaction in points. If [EV > 0], the system is profitable if [EV < 0], the system is loss-making.
But the financial result for each individual transaction depends on the size of the position, that is, the value of the item. Consider an example. Suppose we have a certain amount in the account. We are opening a position on a currency pair (not the point) with the shoulder of 1 to 100. The market movement on 1 % can result in either a doubling or complete loss of capital. Otherwise, we open the shoulder 1 to 20. And similar to the movement of the market will have 1 % to 20 % in fluctuations of the account. Using a smaller position size, we have significantly reduced the risks. Of course, the risk is reduced to a reasonable limit.
At each time point to determine the optimal position size for the trading system. This issue is a discipline - the science of money management (Money Management). Summarizing all of the above, I would like to advise beginners to reject the foreign exchange market forex strategy searches for break-even, and the search for a reliable and simple system to learn to plan and manage the sales process risks. Source: DewinforexSocial button for Joomla