Shulou(Shulou.com)06/01 Report--

In fact, the most important thing in foreign exchange trading is the balance between risk and profit, everyone needs to determine their own risk tolerance, on this basis, and then consider reasonable fund management, and finally try to maximize profits.

The biggest profit is of course the ultimate goal of every currency speculator, and there are three simple ways to achieve this goal, two of which can be judged by common sense. These two methods are used by the most people, but they also increase the risk when it is possible to increase profits, so use them with caution. The third method is the most difficult, but the most reasonable, should be the direction of everyone's efforts.

First, increase the position

This is the simplest and most commonly used method. If the long-term return on investment of the trading system is positive, that is, it can be profitable in the long run, this is a feasible method. However, when using this method, it is best not to increase the risk ratio because of increasing the position. It is best to increase the position according to the risk after increasing the account amount after making a profit.

For example, the original capital of the account is $10,000, the risk is set at 5%, the stop loss is 100 points, and the position should be 0.5 hands. When the capital increases to US $20,000, the position can be increased to the first hand, and the risk is still 5%. Traders who use this method must have greater psychological tolerance. Because there is bound to be a loss in the transaction, and this loss must be the largest position, many people because of psychological problems.

At such times, regardless of trading profits or losses, it is possible to close positions too early, sometimes turning trades that are likely to make a profit into losses. If the success rate of the trading system is less than 50%, basically you should no longer consider the method of increasing the position, because it is likely to only increase the risk and increase the loss without increasing the profit.

Second, increase the number of transactions

Increasing the number of transactions can theoretically increase profits, of course, as long as the success rate of the system is very high. There are many people like to use ultra-short-term trading, trading is very frequent, and sometimes the system does make money, but the relative transaction cost is too high, because each transaction will at least be a little bad.

From the standpoint of brokers, they welcome more trading, because they will earn more, but they also need rebates to their agents. Some irresponsible IB encourages customers to do short-term trading. Sometimes their rebates are even more than the original funds that customers speculate, so some brokers have to reject the "scalping" (ultra-short-term Scalping) trading method.

And excessive trading is also easy to paralyze the server, but one thing is certain, the increase in the number of transactions also means more time, so sooner or later some people will consider using a fully automated trading system, commonly known as "EA".

Third, find a transaction with a better reward / risk ratio

A better way than the above two is to trade only opportunities with a high reward / risk ratio, only at 2:1, or even above 3:1. Of course, this trading method first requires sufficient technology, second, it should be willing to give up, it should be deeply realized that when not to trade is as important as when to trade, and third, it should be patient enough. These are also the conceptual issues of trading that I often talk to you about in the course of my lectures in the past few years.

What should be mentioned in particular here is to use the "countertrend trading method", which generally has a small stop loss, and then uses Fibonacci numbers to estimate the profit target. If you can achieve the ideal reward / risk ratio, you will give up, otherwise you will give up. But there may also be some quite good opportunities, which can also be considered for implementation.

Generally speaking, such opportunities take time and do not exist all the time, so be patient enough. Of course, most of the time, we still recommend that we adopt the operation method of "conforming to the trend", because this trading method is relatively simple and much less risky than the "countertrend trading method".

This third method is obviously better than the above two methods, it expands the profit, reduces the risk at the same time, and does not need to stay in front of the computer for a long time, but unfortunately, not everyone has the ability to adopt this method, the reason is very simple. In this market, there are too few people who can really understand "waiting."

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