In fact, the most important financial transaction is the balance between risk and profit, everyone needs the ability to determine their own risk tolerance, on this basis, then consider reasonable financial management, and finally to seek is how to maximize profit.
Of course, the biggest profit is the ultimate goal of every trader, but to achieve this goal has three simple method in which the two are able to judge with common sense out of. These two methods employed most people, but at the same time may increase the profit situation also increases the risk, so be careful to use. A third method of the hardest, but the most reasonable and should be everyone's direction.
First, increase positions
This is the simplest and most commonly used method. If the trading system of long-term return on investment is positive, that is, long-term profitability, which would be a workable solution. However, when using this method is best not to because of the increased risk positions and expand the proportion, according to the risk and increase profits after the best account in the amount corresponding increase in positions. For example, an account of the original capital of ten thousand US dollars, the risk is set to 5%, with a stop 100 points, hand positions should be 0.5. When the funds to twenty thousand US dollars, the position can be a loss to single-handedly, the risk is still 5%, using this method trader must have greater mental capacity, because there will be a loss in the transaction, and this times must be one of the biggest positions, a lot of people because of psychological problems, at this time, whether the transaction gains and losses are likely to open too early, it may sometimes be profitable to trade into a loss. If the success rate is less than 50% of the trading system, should no longer be considered substantially increase positions method, because it might just increase the risk, increasing the deficit without increasing profitability.
Second, increase the number of transactions
Increase the number of transactions could theoretically increase profits, of course, the premise is a high success rate of the system. There are many people like to use ultra short-term way transaction, the transaction is very frequent, and sometimes the system can indeed make money, but relatively high transaction costs, because each transaction at least be a little difference. Brokers standing position'd welcome more transactions, because they will earn more, but they also need the rebate to their agents (IB), some irresponsible IB is to encourage customers to do more short-term, and sometimes their rebate even popcorn seed money more than the customer, so some brokers had to reject "scalping" (ultra short-term Scalping) and Exchange Act, and excessive trading also tends to paralyze the server, this kind of increase in the number of transactions is not this article within the scope.
Suppose there are two trading systems, a special trading gap (Gap), and another special transaction escape (Runaway) (upward of one, but the price gap and did not make up the gap back to the original and the upward direction development of). Suppose two systems of reward / risk ratio is 2: 1, gapped system can trade five times a day, but the escape system to deal five times a month, we can quickly conclude that the system is definitely better than the long-term upward escape system earn several times more money. This is of course an extreme example, but it shows that if other conditions are the same, the number of transactions and more systems than the number of transactions in the system less earn more money.
Increase the number of transactions also implies the need for more time, so sooner or later some people consider using automated trading systems.
Third, to find a better reward / risk ratio of transaction
Better than the above two methods is only trading high reward / risk ratio of opportunities, trading only 2: 1 or even 3: 1 or more opportunities. This trading method first requires adequate technical, the second must be willing to give up, not when you want to deeply understand the transaction and equally important when the transaction, the third to have enough patience.
By contrarian trading laws generally stop relatively small, then use the Fibonacci numbers, etc. Odd estimated earnings targets, if they can achieve the desired return / risk ratio to do alone, or to give up, but may have some pretty good opportunities , then you can also consider implementing. Usually this opportunity will take time, and not at any time, so have enough patience.
This approach is clearly better than the two methods, but also expanded the profit, while reducing the risk, and do not need a long stay in a computer before, but unfortunately, not everyone has the ability to use this method.
