Today I feel an urge to share a little about sustainability in this blog article.
Nope. I am not talking about the sustainability of the climate. I think we probably may have crossed the Tipping Point to save our planet.
I am talking about the sustainability of your trading strategy in generating profits. Many people still laughed at me that I am still trading in mini lot sizes. They do not believe that trading Forex in mini lot sizes can make money. How wrong they had been.
Novice Traders Vs True Traders
Novice traders are only concerned with how much they can make in their trading. They look at their profits and losses on a per trade basis. To them, they want to make a “killing” in the market with their big trade size and big profits. They want to brag about their big wins to boost their egos among their peers. They allow their egos to do the trading. They will never tell you their huge losses. Losses are just too embarrassing to share. It is a damage to their egos.
On the other hand, true traders are never concerned with their trade sizes. They are never concerned about their big wins to boost their egos. They never have to hide their losses. In fact, they may even share their losses openly. Unlike novice traders, they never allow their egos to get in the way of their trading career.
However, true traders are only concerned with one thing – the sustainability of their trading strategies. They know sustainability is key to building their wealth as a trader. Novice traders DON’T.
It is this different that makes true traders wealthy consistently regardless of market conditions. Just ask my FX idol, George Soros.
What is Sustainability?
Here is the textbook definition of Sustainability – the ability to be maintained at a certain rate or level.
Now, think about it for a moment and let the words and their meaning sink into your subconscious. Focus on the 3 key words – ability, maintain, and certainty.
When you have realized the essence of the definition as I do, then you will be well on your way to create as much wealth as your heart desires.
Which do you prefer? A capital growth of 50% in one trade or an averaged capital growth of 5% monthly?
If you have chosen 50% capital growth in one trade like most novice traders would, then I know you must be financially broke as a trader. No question about it. My apologies if I have just deflated your ego that you have been trying to hide so desperately.
If you have chosen 5% monthly averaged capital growth, then welcome aboard ALGOINSIGHTS PTE LTD. Wealth is waiting for you.
True traders know the power of sustained efforts. They believe in consistency, and repeatability. They know that a trading strategy that gives them 5% averaged monthly capital growth is far more superior than a 50% capital growth in one trade that only happens once in a long while without any chance of repeating itself consistently.
True traders believe in certainty, not chance or luck or hope like most novice traders do. They believe they must be able to stay in the game long enough to win it. And this is how they win in the long run. They see trading as a marathon, NOT a sprint.
How to Measure Sustainability
So, how do you know your trading strategy will make you money over the long run? Not 1 week, or a few months, but decades.
There are many ratios you can investigate to measure the sustainability of your trading strategy. There are all listed here. I have no wish to go through each of them on this blog article. You can always ask Mr. Google for answers.
However, I would like to share one important measurement that measures the sustainability of your trading strategy – Positive Expectancy.
This is a true trader’s secret. When you get this Positive Expectancy on your side, you will be laughing every time you make a profit withdrawal from your trading accounts.
What is Positive Expectancy Anyway?
Positive Expectancy measures your expected profit per dollar risked on average over the long run from your trading strategies. It is also known as your “Edge” over the market.
Good, profitable traders look for this edge relentlessly in their trading strategies.
Naturally, a trading system with a Positive Expectancy of $5 per trade will make you more money than a trading system with a Positive Expectancy of $2 per trade (all other things being equal in the long run).
While both trading systems are profitable in the long run, the one with the higher Positive Expectancy will generate more money for you. Period.
Therefore, the higher the Positive Expectancy in your trading strategy, the better it is in generating profits for you.
In a nutshell, the Positive Expectancy of your trading strategy MUST be GREATER than 1 to be profitable in the long run.
A look at our performance statistics will tell you that we are on the right side of the Forex trading universe. That our performance is unmatched by many others. Need we talk anymore?
There will always be some major market movements every now and then in the trading universe, but with Positive Expectancy on your side, you are more likely to ride it out and come up the winner. This is so true with us.
Get it Done
If you are NOT already a client of ALGOINSIGHTS PTE LTD, and seriously want to build your wealth trading the Forex market, then work on your current trading strategies till you get Positive Expectancy on your side. Doing so will increase your wealth and net worth over time. Get it Done.
Thank you for reading this blog article.
Profits to all.
CEO & Founder, ALGOINSIGHTS PTE LTD