See to it that the odds are in your favor!

In the article “Probability in case of a forex trading system” you have learned that your goal has to be to have the odds in your favor. In addition to this you have been taught about the effect of different risk/reward ratios are having on the final output. In this article we put the theory into practice, during which I’ll show you how to get the odds in our favor by trading with the OFS Trading System.

You have learned that with a success rate which exceeds 50% you’re already profitable in the long term, providing your risk/reward ratio is at least 1:1 or higher. Which means that the risk will never exceed the possible return.

The minimal required risk/reward ratio in case of the OFS Trading System is also 1:1, so if you’ll get a success rate exceeding 50% with the this system, you’ll already be profitable in the long term.

The odds in your favor with the OFS Trading System

So the first target to reach is a success rate exceeding 50%. To be able to realize this, we’ll have to create a situation, in which the odds are in our favor. With the OFS Trading System we’ll reach this goal by trading in the direction of the trend.

If a price of a currency pair is clearly rising or dropping in the long term, then we call this a trend. When the price is rising, this is called an uptrend and when on the other hand the price is dropping , this is logically called a downtrend.

I’ll present an example to clarify this.

forex-chart

If you’ll have to determine without any prior knowledge whether the price is going to rise or to drop based on the above shown figure, this is consequently quite difficult. A clear pattern isn’t perceptible and consequently the odds are about 50-50.

forex downtrend

When we are observing the above shown figure, we’re surely able to conclude that there is a good chance that the price will be continuing to drop in relation to the chance that the price will be going to rise. When you’re going short on this, you consequently are going to trade with the odds being in your favor! Of course there is always a slight possibility that the price will still be going to rise, but in the long term the chance that you are on the right side will happen a lot more often than the chance that you are on the wrong side.

By just trading in the direction of the trend, we’ll see to it that the success rate in the long term will be above 50%!

De risk/reward ratio van het OFS Trading System

In the article “Probability in case of a forex trading system”, you have been taught that by handling a favorable risk/reward ratio you’ll already be more profitable even in case of a less favorable success rate.

With the OFS Trading System you’ll only open positions with a minimal risk/reward ratio of 1:1. However in actual practice you’ll often notice that most of the trade setups of the OFS Trading System are having a risk/reward ratio varying from 1:1,5 up to 1:2.

The favorable risk/reward ratios of the OFS Trading System will see to it, that your required success rates are even lower to be profitable in the long term. As you could have noticed in the preceding article, your required success rate to be profitable will be 41% in case of a risk/reward ratio of 1:1,5 and even only a mere 34% in case you’re handling a risk/reward ratio of 1:2!

The foundation of the OFS Trading System

Basically you’ll already be making a profit with the OFS Trading System as a result of the fact that the success rate of the trade setups is exceeding 50% by trading in the direction of the trend, combined with a reduction of the required success rate to be profitable thanks to the favorable risk/reward ratios of the trade setups.

Thanks to the rules of the OFS Trading System, you’ll also be able to enter into a trade at the most favorable moment and to take maximum advantage of this trade, as a result of which you’re going to make even more profit. As a matter of fact you’re going to learn all this during the training of the OFS Trading System.

In the next articles I shall intensively elaborate on the creation of the right mindset which you’ll be needing to become successful in the long term and I shall clarify the way the OFS Trading System adjusts to these developments.

Summary of the article series “Forex Trading is simple!”:

Be Sociable, Share!

Speak Your Mind

*