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Statistics for investors
The importance of the role of statistics in Forex, I would like to talk more later, but for now let's focus on the most simple things that novice investors got one more topic for thought. Of course, the usual Forex trader can know nothing for sure. All speculation speculator has a definite probability.

When a dealer says he knows where the price will go, he or not experienced, or stupid. The investor should also understand that it is impossible to reject neither the probability, nor are they available for the analysis of statistical data.

Such neglect of information can be very dangerous to humans. Imagine a PAMM account that You think to invest money. The Deposit was opened 6 months. therefore, and the profit currently stands at 50%. Just before conservative investors emerges something rainbow. Add fuel to the fire, saying that the drawdown and generally is not exceeded during the lifetime of the account 10% of the value of the Deposit.

And again, approvingly nodding his head. But what would investors, if they knew that committed on account of there were only 5 transactions? May not have sufficient experience in investing people just be shaken by the shoulders, but professionals would immediately think.

Every experiment always held many times that a person could obtain a reliable result. Of course, much depends on the required accuracy, but even at school in physics lessons students produce at least 20 measurements. The more times a test will be made, the more reliable can be considered the result.

In the example cited above, the trader actually made five transactions, measurements. Such a number cannot speak about the reliability and stability of the result. It is possible that the speculator was just lucky, or he did not close the transaction until, until they become profitable, ignoring temporary drawdown. As one of my friends trader five transactions is not statistics.

The more committed positions, the greater the likelihood of the sustainability of trade. Moreover, each operation still takes part of the profit on the spread. Therefore, if the trade was made 1000 transactions, and expense all the time growing up, it means that the trading system is clearly shifted the probability of profit in a big way, than the level of 50%.

Moreover, the trader made a profit, and the advantage of the losing side because of the spread was the vanquished yield. Let me remind you that initially the probability of trade is not 50/50, as I think many new traders. The stats for the investor this is an important tool that allows the evaluation of promising projects.

Don't forget that we spend in each transaction in the spread. Therefore, a trade that made a small number of transactions could not claim the title of stable profitable trading. This caveat is taken into account for all investors to avoid investing in "lucky".

Category: Forex | Added by: (30.10.2017)
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