Losses For The Sake Of Victory Part 2

By in Intro to Forex on April 7, 2020

So, your chances of a prize at use of systems that follows a trend are better, but there are also other obstacles to occurrence of greater quantities of advantageous transactions. Though the markets aren’t casual, you can expect short-term casual movements within a trend, turns in the end of each trend and delay of the majority of systems following a trend at occurrence in the market and an exit from it.


As a result, thanks to delays and unexpected short-term casual movements, all of you are still subject to randomness influence. If to take time enough, the skilled trader can expect to suffer 10 or more losses successively.

If to speak about realistic expectations of trade Thomas Stridsman, the author of books “Systems of trade which Systems of trade and Capital management” work “and”, has expressed so:

“That is more important, than size of your advantageous transaction so it when you win, or how many prizes or losses can have successively. That is, how many you plan to win on the average on all transactions, profitable and unprofitable together and how much this size can change at reduction of number of transactions.

It is more useful to consider more steadfastly the profitable periods of time, like weeks or months, instead of profitable transactions. It is obviously not enough simple relation of prizes to losses “.

If you think that the increase in quantity of transactions will make strategy of more successful, think once again. Kaufman in “Short course” shows that, the more transactions the trader, the below its profit in the long-term plan does. On the average, long-term transactions produce more than potential profit. However, if you are the long-term trader to receive your risk of more losses is increased, as you are in the market longer and consequently risk during longer periods. Practically, irrespective of your style of trade or preferable time of deduction of the transaction, at increase in their number you will lose more often and more than in one case.

Kaufman cites the data as proof of this statement. He has conducted thousand tests of the various systems; some of them are presented in the Short course. In one of examples he has tested Microsoft for the period in 10 years, having finished January, 2001, having covered the period when the share has taken place a way from the price 1.04$ to a maximum 60$ in December 1999.

Using 80-day moving average for generation of signals of purchasing and sale, trading both long and short positions, he has produced in total 88 transactions. From them only 36 – or 41 % – have appeared to be profitable. And Kaufman makes comments that “that system of a trend which gives from 35 % of profitable transactions” actually is good.

In case you decided to participate in forex trading must start from learning the basics of currency exchange market to make sure you do not experience problems with this industry.

There is another option – you can hire professional traders to do this job for you – read more about forex investment here. Also make sure to search for the knowledge in a good forex book.


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