One method of trading that a lot of our forex traders' use, is holding their position for only a very short amount of time and a very small number of pips. Essentially what they are trying to achieve is a high accuracy edge.
A trading systems' edge is what is going to make it profitable in the long run. A great example of an edge is a blackjack game at a casino. Based on the rules of the game, the house has a very slight edge over the player. After a lot of repetition, a great sample size of hands is played and the casino exploits the edge and makes a lot of money. This should be the same with any system. It is critical to understand that losses will happen and the only way to win is have an edge over the long run.
With this in mind different systems have different types of edges. In this article I will show you a great risk management trick called the Martingale that will help you maximize the returns of a high accuracy system. Before I go on, let me briefly describe what the Martingale Strategy is. Then I’ll show how it can be used. Here’s how it works in theory:
In the Martingale Strategy you increase your position size when you have multiple losing trades in a high accuracy system. When the system’s performance reverts back to the mean and begins to win again, the losses are quickly recouped because of the increased size of the winning trades.
A trading systems' edge is what is going to make it profitable in the long run. A great example of an edge is a blackjack game at a casino. Based on the rules of the game, the house has a very slight edge over the player. After a lot of repetition, a great sample size of hands is played and the casino exploits the edge and makes a lot of money. This should be the same with any system. It is critical to understand that losses will happen and the only way to win is have an edge over the long run.
With this in mind different systems have different types of edges. In this article I will show you a great risk management trick called the Martingale that will help you maximize the returns of a high accuracy system. Before I go on, let me briefly describe what the Martingale Strategy is. Then I’ll show how it can be used. Here’s how it works in theory:
In the Martingale Strategy you increase your position size when you have multiple losing trades in a high accuracy system. When the system’s performance reverts back to the mean and begins to win again, the losses are quickly recouped because of the increased size of the winning trades.
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