After thinking long and hard about why virtually every trader fails, I think I have discovered the answer.
The simple trading issue is this:
It is nearly impossible to make the math work.
Let me offer you an illuion of why it is so tough to create the math spice up trading:
I traded this method the whole day today and did well but there is an issue that all traders face no matter their methods and it is this:
You never know just how much profit the commerce will give you.
You can know, for sure, your cease and entry but you simply can't know how much profit the trade has inside
This is the main reason why nearly everybody loses money trading.
For instance, today on all my trades the entries were crystal clear and so was my stops- always set to 15 pips.
Being you could never know how much the commerce has inside, on lots of my trades I wanted to take the profits before they disappeared, so on several trades I obtained 3 pips profit, 5 pips profit, and 10 pips profit.
A number of these trades went to give larger profits if I had stayed in the commerce but some of these retraced and my profit would have disappeared if I had not exited with a fast profit.
So, what I am getting at is this:
The risk/reward ratios in trading are negative because you can't be GUARANTEED the commerce provides a profit that's equal or more than your stop loss.
Thus, basically you are risking 15 pips(if you use a 15 pip stop) to create 3,6, 10 and sometimes 15 pips.
Today, I hit most of my trades but when my 15 pip stop got hit a few times, nearly all of my profits would have disappeared.
Sooner or later, this may occur and all of those tiny profits will be given back by being discontinued out a couple of times.
Therefore, my question is this:
How, precisely, do you manage this issue?
Is it true that lots of profits, which are smaller than 15 pips, ultimately make up for becoming stopped a couple of times?
In my opinion, this issue is your principal dillema in gambling and is the reason why practically every trader, in the end, ends up losing all their money.
It's nearly impossible to make the math functions (your profits add up to more than your losses) because it is impossible to INSURE your profits will probably be larger than your losses because you NEVER KNOW just how much profit a trade has inside.
Can anyone you think of a way to fix this most basic trading issue?
all ideas would be appreciated.
Thanks and Happy Trading