The most important thing in all of trading. Returns are what make sure that we stay afloat and make money. And we need to think about what returns we are counting on in order to form a perfect trading strategy.
Of course the more the better – we all know that – and of course it is better not to undermine your confidence by counting on a lower-level return, right?
In forex unrealistic returns expectations – like you want to make 100 percent annual return, for example, will only make you make more reckless trades. And that only increases your risks as you are going to put down trades with no sure return and no sure way to make money.
What are we to do then?
Well, we are to look at the situation realistically. Your return expectations are going to form what kind of trader you are going to be. And in forming your return level views you need to understand that there is such thing as drawdowns.
This is the drop that the price for the assets is making from the highest to the lowest point. And you are to decide – what size of a drawdown you can withstand without having to sell your soul for several pennies.
Form realistic view of your possible returns in order to shield yourself from bigger losses. That is one of the most important steps on the way to form a perfect trading strategy.