So you’ve finally figured out that the miserly returns from fixed deposits is not going to do much help in turning your investment capital to $1 million in X years time. The returns that your fund manager offer does not provide you much help either. What you need is double digit returns, and you need to achieve these numbers every year...consistently! But how is this going to be possible? To do that you are going to need to understand a few factors that will either aid or hinder your progress: 1. Percentage Wins (Depends of experience and level of skill) This just means the number of winning trades divided by the total number of trades multiply by 100%. Assume you trade 30 times in a year. Out of these 30 trades, you are profitable in 14 of them, and the rest are losing trades. Your winning percentage is 46.7% (14/30 x 100%). Simple right? Question: Does a trader who win only 40% of his trades be profitable?
2. Average Wins Vs Average Loss (Letting profits run, cutting losses short) To calculate your average wins for a year, just simply add up all your profits for that year then divide the result by the number of profitable trades. Do likewise for calculating your average loss.
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