Forex Automoney: Leverage Key Rules For Successful Trading Part 2
Over the years it came clear to me that many investors losing money using Forex Automoney
or other trading techniques and regardless of their forecasts quality. One of the reasons that it happens is the lack of understanding what exactly the leverage roll is in the trading puzzle. I have noticed that many traders change their leverage on different positions they take. There nothing systematic about the chosen leverage, it is more relate to feeling a past failures or success. The traders who do that dont aware to the statistical problem this cause the statistical model Forex Automoney platform is build on.To fully understand the influence of frequently changing leverage on trading statistic, follow the next example: Lets assume that a certain trader use Forex Automoney intraday forecasts, and that the Forex Automoney has 60% of success in its forecast and 40% failures. The average take profit on successful position is 70 pips, and the average loss on unsuccessful position is 50 pips. This example describe pretty good forecast, and every trader who follow Forex Automoney recommendation should earn money.
But what will happen in case a trader starts using different leverage on different position he takes (assuming he doubles the leverage for some of the positions)? The overall statistic of successful and unsuccessful positions that Forex Automoney provides will remain the same, but the personal statistic of the doubled leverage positions and the regular leverage positions will not be the same. So we could end up with 4 doubled leverage positions which lost money, and 6 regular leverage positions which made money. In that scenario the trader will actually lose 400 pips, and earn 420 pips, which is nothing compare to the risk involved, and this is just a double leverage example, think about situations that traders triple their leverage on some of the positions.
This kind of trading behavior is actually damaging the Forex Automoney statistical structure of this method, and on the end of the day cause to a rapidly money lost. The above example emphasis that quality forecast is not enough in order to have profit, it is one essential ingredient, but in order to make money on the Forex market traders should have more than one inordinate, well calibrate together for profit.
Before start trading with Forex Automoney on real accounts, you have to reveal what other ingredients you need in order to have profitable trading experience.
For more information you can visit at: http://www.forexautomoney-review.com
From Michael Kahiri - MBA in Finance and Trading strategies.
by: Michael