simpleforex

Most approaches to systems of trading in the FOREX markets are of a predictive nature.

The reason for this is simple. With the high level of leverage one can use, if one can just predict accurately the direction the market is headed, literally millions of dollars can be made in the matter of just a few minutes. It is this possibility that is the root of the excitement one gets from trading the markets and the high one gets when he or she is right.

There is, however, another approach which is not as exciting but is logical and mathematical and does not require the use of predictive abilities.

Such an approach requires that one does not try in any manner to guess where the market is headed and have fixed strategies in place for each and every possibility within the market.

Such an approach does not leave anything to chance and in so doing, the outcome is always certain and the excitement of being right will not be there.

What is there however, is the profits that will come with it.

In making such an approach, one must look at all possibilities with every move of the market and if one does that, it can be seen that the market has only two possibilities at all times.

It will either go up or it will go down. It then just ends up with the same odds as a toss of a coin.

The odds in a toss of a coin is 50-50 and as such one cannot have a winning advantage so where can an advantage be created ?

Ok. What if we had a situation where you bet on a toss of the coin and if you win, you get twice what you bet ?

This now changes the picture dramatically.

Each time you win, you get $200 to your $100 bet...making $300 total

Each time you lose, you just lose your $100

Your odds of winning and losing still remains the same at 50-50 but your leverage is in the amounts you will end up with each time you win or you lose.

Let's try looking at 6 tosses of the coin and an even outcome throughout. So you would win 3 times and also lose 3 times.

Your outlay is $600 for 6 bets and you win 3 and you lose 3.

For each of the 3 wins you have, you get $300 which is $100, your original bet and $200 which you win.

3 wins will then total $900 for a total outlay of $600 equals a profit of $300.

Your betting could go like this.

Start $600, bet $100 ...Lost.. $500 remains.
Start $500, bet $100 ...Win .. $400 remains plus $300 win.. total $700
Start $700, bet $100 ...Lost.. $600 remains.
Start $600, bet $100 ...Win .. $500 remains plus $300 win.. total $800
Start $800, bet $100 ...Lost.. $700 remains.
Start $700, bet $100 ...Win .. $600 remains plus $300 win.. total $900

You could use this strategy here.

Simple 1 Step FOREX
Financing provided.

To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

abcy8

I have doubts about your way of comparison in your example. If each time we place a forex trade, we win or lose the same amount $100 then it is fair to say the probability of winning is 50-50. But if each time we win, the amount is twice then the probability of wining will not be 50-50, it will be very much less.
Have you arrived at the probability of winning to secure twice the amount?

simpleforex

You are of course entitled to your doubts.

If you place a forex trade, what are the possible outcomes ?

You will either be correct in your assessment or you will be wrong.

Is there any possibility of a third outcome ?

If there is not, then your probability is going to be either one of the two.

Would that make it anything other than a 50-50 ?

Simple 1 Step FOREX
Financing provided.

To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

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.

simpleforex

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.

Simple 1 Step FOREX
Financing provided.

To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

abcy8

You are totally confused about the possible outcome of a bet (win or lose) versus the probability of winning a bet. These are two totally different things. Two possible outcomes does not mean the probability of winning is 50-50.

Even if you buy big sweep, the outcome is either you win or you lose. I'm sure those who have bought big sweep will agree the probability of winning big sweep is not the same probability as winning the tossing of a coin 50-50.

simpleforex

ok. I am totally confused and you are right.

Are you making money in FOREX ?

I would rather be totally confused and totally wrong and still making money than to be absolutely clear and absolutely right and losing a big hole in Forex.

Seen it happen so many times.

Simple 1 Step FOREX
Financing provided.

To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.