News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Bearish
Wall Street
Bullish
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Join @ZabelinDimitri 's #webinar at 11:30 PM ET/3:30 AM GMT to find out how geopolitical risk will affect the markets in the week ahead. Register here: https://t.co/hsULxMNOtM https://t.co/26Vn8xNZHF
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Gold: -0.02% Silver: -0.10% Oil - US Crude: -0.24% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/k82jSelAG3
  • The US Dollar continues to show tones of reversal as Q3 winds down. Can buyers drive the currency through the Q4 open? Get your #currencies update from @JStanleyFX here: https://t.co/mnVvIOhtay https://t.co/H5xQXSalBf
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.43% 🇳🇿NZD: 0.20% 🇬🇧GBP: 0.18% 🇨🇦CAD: 0.03% 🇪🇺EUR: 0.02% 🇨🇭CHF: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/TtUEpT5jDK
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.63%, while traders in EUR/GBP are at opposite extremes with 64.46%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/uxUVKs9BeK
  • 10 out of 11 S&P 500 sectors ended higher on Friday, with half of the companies in the green. Information technology (+1.63%), consumer discretionary (+1.44%), utilities (+1.12%) were among the best performing ones, whereas energy (-0.26%) lagged. https://www.dailyfx.com/forex/market_alert/2020/09/28/Nasdaq-100-Futures-Extend-Gains-Hang-Seng-and-Nifty-50-May-Rebound.html https://t.co/eIecw9NQQD
  • The Hang Seng Index (HSI) has likely formed a bullish “AB=CD” pattern, with the “D” point found at around 23,080. A rebound from the “D” point may lead to more gains with an eye at 23,760 and then 24,200. https://t.co/ObmqqYa5P4
  • Wall Street Futures Update: Dow Jones (+0.39%) S&P 500 (+0.33%) Nasdaq 100 (+0.30%) [delayed] -BBG
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/UVvf51HiVP https://t.co/mkHo2v37as
  • #2020election polls continue to show Democratic nominee Joe Biden maintaining a strong lead #Trump Supreme Court nomination may throw a wrench into bipartisan stimulus talks #AUDUSD is trading at former resistance-turned-support. What happens if it breaks? https://www.dailyfx.com/forex/fundamental/article/special_report/2020/09/27/AUDUSD-Analysis-Ahead-of-Presidential-Debate-Supreme-Court-Nominee-Battle-.html
Heads I Win….and Tails I Win Too!

Heads I Win….and Tails I Win Too!

2011-01-07 14:35:00
Thomas Long, Course Instructor
Share:

Because I get to work with new traders in our DailyFX Trading Course, I get a pretty good idea of why new traders lose money. One of the reasons is that these traders do not have an idea of what they want to achieve. Sure, everybody wants to make money, but we need to have realistic expectations to get to that level.

I like to compare trading to flipping a coin. If I paid you $1 every time the coin landed on tails and you paid me $1 every time the coin landed on heads. We could flip all day and night and most likely break even after every 100 flips.

So how is this information useful to a trader?

I like to recommend to new traders that they think in terms of winning half of their trades. If you trade with the trend and only take solid setups, this can be done. But that is only half of the battle.

If we win $1 when we are right and lose $1 when we are wrong, how can we make money?

The answer is that we either have to win more often or win more when we are right. The idea then is to not win $1 when we are right, but to win $2 when we are right and still only lose $1 when we are wrong. That is our 1:2 risk:reward ratio we talk about in trading. If you are risking 50 pips on the trade, you should look for twice that in profit, which is 100 pips.

Now we can look at that coin toss differently.

If I paid you $1 every time the coin landed on tails, but you had to pay me $2 every time the coin landed on heads, I would want to flip that coin 24 hours a day for the rest of my life. Even if I lost five flips in a row, I would still want to bet on that next flip because I know that after a series of 100 flips, I would still win about half of the time and lose about half of the time. So no matter what happens on the next flip, I would consider myself a winner because after a series of flips, I would most likely be profitable.

Heads I win…and tails I win too.

You can find more on Money Management in the Course, which can be found at this link:

DailyFX Trading Course

FXCM clients have free and complete access to all of the material. The login is the same used to access your live FXCM account. If you are not yet a live client, you can get free temporary access by emailing us at instructor@dailyfx.com.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES