Being a trader, creating money is a different way of looking for the sole trade that is life changing and understanding money trading. Moreover, in trading, producing money is like creating sequences of trades that comply with an edgy technique which also means positive expectancy. This simply means that for just over time, one can able to make more money rather than losing it.
Main Elements in Expectancy Calculation
Below are the requirements in order to compute for the expectancy within the system of trading:
- Win Rate or Win/Loss Ratio – also known as the battling average or the percentage of winning trades
- Average Gain
- Average Loss
Furthermore, the formula for calculating the system expectancy is:
[win rate x average gain] – [(1 – win rate) x average loss]
Reason for Finding for a High Win Rate
High Win Rate is generally the most natural and basic way to go. In the field of education, the high win rate applies as a reward for being on the right side and punished once wrong is being committed.
It is a good feeling the moment we do the right thing and feel bad during the time that we are doing it wrong.
High Win Rate in Trading
Satisfying on a psychological way on doing right most of the time rather being wrong is very evident in terms of trading. Moreover, in the trading industry or in those where the bankruptcy attorney San Diego is practicing, being right most of the time will result in continuously creating money in the market. Yet, keep in mind that people do not have the ability to control the market. Knowing this, a high win rate in trading is, most of the time, unachievable.
The Profit/Loss Ratio
Since it is impossible to achieve a high win rate in a consistent manner and at the same time seemed to be right about half, the strategy is to create money the moment you are right. Basically, the profit/loss ratio is the average win over the average loss. In case, more money is created than lose for a series of trades on an average, expect to produce money over time despite being right for only half of the time. This way, making money is consistently done by professional traders.