| Quote: | | | Originally Posted by abcy8 | | | | |
| When you toss a coin, the outcome is movement of one dimension only, we are betting the "direction" of facing up or down, hence probability of winning is 50-50.
When you place a forex trade, the movement is no more one dimensional, we are no more betting just the direction of up or down. We are betting an outcome that is movement of three dimensions,
1. the direction of up or down
2. the amount of movement
3. the time it takes to move
Even if you guess the direction correctly based on 50-50 chance, you may still not win the trade due to the amount and time factor. | |
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I think you have missed the point completely.
There are only two possible outcome in a forex trade. No matter how much complication you may want to bring into the equation, the outcome is still one of two. You are correct in the fact that more movement is needed in your chosen direction to attain a gain and less against you to attain a loss but the outcome is only one of two possible.
This has the same probability as the toss of a coin.
To attain a gain of 2 to 1, it will have to move twice as far in your direction against once in the opposite. By analysis, you get to choose which direction has the better bias but it still boils down to if you are right or if you are not.
In other words, you just need to be more right than wrong and given the volatility of FOREX, the difference is not at all noticable.
What it does come down to is just that you will either be right or you will be wrong.
If you are right, you might as well make twice as much as you are willing to lose.
If you are wrong, you can always double up your position and wait for a pullback.
If you keep doubling each time you lose in a toss of a coin, you will eventually end up winning.
It is a simple strategy, there is no need to make it complicated.
