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What makes a winning FX trading strategy



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Financial planning in relationship - By Sng Chong How

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What is winning

Winning is not about how much you earn or how fast you earn. Not only able winning how much verse losses how much and also not only about how fast you can get back your investment or return of your investment. Winning is all of that and above all, is a set of rules that you can apply and consistent obtain that winning results you wanted. The key word in all of these win, low, ROI, etc is consistency.

Consistency

You can win 10 times your invested capital or 20 times multiple your trading account initial deposit. But without consistency, all this will disappear very fast. You can win 10 consecutive trades with thousand of pits, but just 1 lost may wipe out all your earnings. You can earn back your capital plus interested within 1 month but may loss all within a day. The factor that contributes most importantly is consistency winning.

Continuous Profit

If you can achieve profit at 20% every month consistently, within 4 years with an initial capital of 1K, you will hit 1 million dollar. I repeat, its 1 million dollars within 4 years at 20% ROI. This is unbeliever but achievable if there is consistency. But in order to achieve consistency, there is a few factor to consider firsts.

Constant Factor

If you have a winning strategy that makes you 100 pips for every trade over 50 trades including losses and carry trade, you would make 5 thousand dollars for a mini-contract (10k) lot. This portion is the constant factor. Many trader are looking for this but never able to find such a perfect system as currency has its own character and will changes according to demand and supply.

Variable Factor

The variable factor in this case is capital involved and the trading lot size. With more capital and more lots number, your gain will multiple tremendous. This variable factor can also include time and leverage. With more time, you gain more and by leveraging on many different broker and trading accounts, you earn even more.

The missing puzzle

If you think carefully, the above variable multiple by constant factor, will give you a winning consistent results. But you are missing 1 important pieces of the puzzle. That is changes. Fundament changes in the nature of all demand and supply. This is affected by news, greed and demand changes. This is the factor which cannot be control, neither is copied but can be predicted rather inaccurately if you find a strong forces to more the currency price.

Constant * variable * changes = consistency winning

This may look to be a winning consistency but due to changes which is widely unpredictable, many trader is focus on find the black box in forex trading. The box which switches the changes in favourable to your winning strategy and don’t trade when not in your favour.

Most important is to maintain a high constant winning rate, with moderate growing capital and limit your risk of losses to changes.


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Financial planning in relationship - By Sng Chong How

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About the Author: Sng Chong How

RSS for Sng's articles - Visit Sng's website

I support green products and actively involved in recycling movement. Currently am blogging and trading Forex to earn extra income to support family on top of having a full-time job.


Click here to visit Sng's website.
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