Pip spread/SL + TP ratio, mm, pyschology, broker, and trading system are all vital.
Lets face it...say you are trading the euro with a 2 pip spread. TP = 50 and SL = 50. Your odds of winning are 48/100 or 48%. The chance of you losing is 52%. Thus...on average you are losing 4% of all of the money that you risk. Your trading system must be good enough to overcome that 4% deficit. Hence...you must have a good trading system. If your Broker is a cheat....your odds are even tougher. And there are many ways they can cheat you......unfair swap...stop loss hunting...spread widening...slippage...I could go on and on.
My thinking is...keep the trading system as simple as possible....keep your pip spread/SL +TP ratio as low as possible. Find a system with an edge because you must have an edge or the odds will defeat you. 4hr or daily candles for instance would allow for you to use larger SL and tp levels....thereby reducing SOME of the edge against you. Find the fairest broker you can.
I've played craps many times at the casino. You can win sometimes....but it is tough to be a winner overall. If you play the game the smartest way possible...you can reduce the casino's odds to just under 1%. Thats better than the 4% above with a flip of the coin type of system.
So with forex....you need to have a good enough long term system to overcome the 4%+ advantage that is against most systems in Forex.
Sometimes a system stops working because market conditions change. Are we good enough to all know when that is? Should we change as the markets change? Or...just stick with a system that we believe in come hell or high water?
Lets face it...say you are trading the euro with a 2 pip spread. TP = 50 and SL = 50. Your odds of winning are 48/100 or 48%. The chance of you losing is 52%. Thus...on average you are losing 4% of all of the money that you risk. Your trading system must be good enough to overcome that 4% deficit. Hence...you must have a good trading system. If your Broker is a cheat....your odds are even tougher. And there are many ways they can cheat you......unfair swap...stop loss hunting...spread widening...slippage...I could go on and on.
My thinking is...keep the trading system as simple as possible....keep your pip spread/SL +TP ratio as low as possible. Find a system with an edge because you must have an edge or the odds will defeat you. 4hr or daily candles for instance would allow for you to use larger SL and tp levels....thereby reducing SOME of the edge against you. Find the fairest broker you can.
I've played craps many times at the casino. You can win sometimes....but it is tough to be a winner overall. If you play the game the smartest way possible...you can reduce the casino's odds to just under 1%. Thats better than the 4% above with a flip of the coin type of system.
So with forex....you need to have a good enough long term system to overcome the 4%+ advantage that is against most systems in Forex.
Sometimes a system stops working because market conditions change. Are we good enough to all know when that is? Should we change as the markets change? Or...just stick with a system that we believe in come hell or high water?