Forex trading education - The Integration Rule
Proper leverage+statistical information = guaranteed Victory
In order to achieve minimal risk, you need to divide your portfolio into many smaller portions. It can also be said in another way: it is forbidden to risk more than 2-3 percent of the portfolio on one transaction. What does this mean? If i open a minimal portfolio of 10,000 USD, I don't risk more than 200-300 USD in one transaction. How do i do this? I set a stop-loss order at a distance of 200-300 pips. And why? When you flip a coin, you can get sequences of heads or tails. It is not one time heads one time tails. It can be: five time tails and three times heads.
When we add up the results, it comes out to 50-50.
Statistics is on our side, when there are many transactions. And as we said, out of 20 flips, the coin can land 13 times on heads and 7 times on tails, but there is no need to worry - it will balance out later. What can we do, statistics is an exact science. Therefore it is forbidden to arrive at a situation in which you have no many left for trading because then the game will end and the whole theory which i am teaching you is discounted.
What is the chance that my son, on the way to school, will lose 20 times in a row or that i will flip a coin 20 times and it will land on heads? The answer: one half to the 20th power, in other words, 1 in a million. The chance that you will lose 20 times in a row, even if you are a 5 years old child, is one in a million.
And what is the chance that i will lose 30 times in a row? One in Billion.
It will never happen, you will never be able to erase your entire portfolio. Statistics is on your side.
So never forget the rule: don't risk in one deal more than 2-3 percent, so that if you lose in a few transactions in a row, nothing happened, you have enough money to continue trading and eventually the account will balance itself out.
Whats Next?
* Trap 1: size of leverage
Or go back to the education index
In order to achieve minimal risk, you need to divide your portfolio into many smaller portions. It can also be said in another way: it is forbidden to risk more than 2-3 percent of the portfolio on one transaction. What does this mean? If i open a minimal portfolio of 10,000 USD, I don't risk more than 200-300 USD in one transaction. How do i do this? I set a stop-loss order at a distance of 200-300 pips. And why? When you flip a coin, you can get sequences of heads or tails. It is not one time heads one time tails. It can be: five time tails and three times heads.
When we add up the results, it comes out to 50-50.
Statistics is on our side, when there are many transactions. And as we said, out of 20 flips, the coin can land 13 times on heads and 7 times on tails, but there is no need to worry - it will balance out later. What can we do, statistics is an exact science. Therefore it is forbidden to arrive at a situation in which you have no many left for trading because then the game will end and the whole theory which i am teaching you is discounted.
What is the chance that my son, on the way to school, will lose 20 times in a row or that i will flip a coin 20 times and it will land on heads? The answer: one half to the 20th power, in other words, 1 in a million. The chance that you will lose 20 times in a row, even if you are a 5 years old child, is one in a million.
And what is the chance that i will lose 30 times in a row? One in Billion.
It will never happen, you will never be able to erase your entire portfolio. Statistics is on your side.
So never forget the rule: don't risk in one deal more than 2-3 percent, so that if you lose in a few transactions in a row, nothing happened, you have enough money to continue trading and eventually the account will balance itself out.
Whats Next?
* Trap 1: size of leverage
Or go back to the education index
