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Why Daily20pip is a Profitable Forex System

forex-secret-key.jpgA little bit of statistic and mathematics…….(By yougotit)

 

Let’s have a look at the daily20pip (D20P) results since DEC-06 till AUG-08 (from Mod’s topic: performance and live trading result)

 

 

 

winning days=215
losing days=109
no touched orders days =115

So, 324 trading days, 115 no trading days (no touched orders), 215 winning days… and this is a significant statistic sample.

 

Winning probability W= winning days/trading days= 0,664
Win/Loss average ratio R = 20 pips/30 pips = 0,667

 

Let’s now consider a couple of significant indicators used in Money Management:

 

Kelly’s formula:
K = W - (1-W) / R = 0,159 –> 15,9 %

It represents the size of the position you should be taking for a trade (as capital risk). Money Management guru’s suggest to take 5% at maximum (for aggressive personalities), so, that result has only the scope to indicate us that D20P is a low risk system

 

Math expectation:
M = W*R - (1-W) = 0,106 –> POSITIVE!

meaning: positive result means D20P gives positive returns in the long run. (Just to be clear for the casinò roulette M is negative……)

 

And now….. only two words:

 

first : DISCIPLINE
D I S C I P L I N E
D I S C I P L I N E
DI-SCI-PLI-NE !!!!!

 

Creative man, put your creativity in your pocket & use it in spending your money with your sons, your friends or for your hobbies when you’ll become a free man from the financial point of view…..Creativity is permitted in forex trading but take in account that using a little bit of creativity, which means a little bit of deviation from the rules of a system, it means months & months of new testing. The most common mistake is to consider bad a good system or good a bad system after only few days of test.

 

Second: PSYCOLOGY
-Do not become a dreamer after your +20 +20 +20+20 gain…
-Do not become depressed after your -30 - 30 -30 (it can happen! )pips loss…
-The best dailychoice should be: I put my order and I check results the day after, just five minutes before I’m going to put a new order….
-DO NOT USE THE MONEY YOU NEED FOR THE SUPERMARKET!!!!!!
-Stop Loss Stop Loss Stop Loss Stop Loss……NEVER remove or shift the -30 pips Stop Loss

 

Forex trading must be a spring of happiness for your life and you’ve to live serene. I’m sorry for my poor English but I hope I have been able to communicate something. Comments are very very welcome.

Bye friends

 

(yougotit / author)

 

 

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