90% of traders lose their money. Other 10% do this

Why Trading Patterns will Kill You Softly

Trading patterns may seem like a reliable way to make profits, but they can be deceptive. When these patterns disappear, they often don't return quickly, sucking money from your account and eroding your confidence. This chapter explores the hidden dangers of relying too heavily on chart patterns.

This is how live of a user looks like who uses a typical pattern based trading Expert Advisor.

Real Example 1

Real Example 2

What can be done about this?

→ We need something that deals with a trade while it is developing. When we receive new information from the market, we should do something with it.

What is something?

Something can mean only one thing: make it give you money. This is called Trade Management.

Imagine your trading pattern is usually 70% correct. And imagine now that an advanced Trade Management Strategy can convert 70% of the trades to winners. 

Do you know what your winning probability will be like? 

Its 1- 0.3*0.3 = 91% That's I would say is a solid win rate! 🤯😎

How can Trade Management convert a loosing position into a winner?

There are many efficient strategies. The one I would like to show in this article is about a dynamic stop loss.

Imagine a case, where you place a Buy position with a fixed Take Profit target. The price moves up and everyone is happy. But suddenly, the market reverses and the prives moves deeeeep down.

Now we could of course place a fixed Stop Loss and hope that it won't be triggered (it will! - and this is what the 90% loosing traders do).

But we can also place the Stop Loss right above our entry price after the price moved up. This way, I make it impossible for the trade to loose money - after it reached say 30% of the initial Take Profit.

This is how it might look like