Please accept YouTube cookies to play this video. By accepting you will be accessing content from YouTube, a service provided by an external third party.

YouTube privacy policy

If you accept this notice, your choice will be saved and the page will refresh.

You don’t have to understand rocket science to do automated trading. The trick is to achieve positive results, even if the trading conditions are bad.

There is one good thing. I have never seen any entry that couldn’t produce at least a small profit if you use the right risk settings to trade it. If you look onto the chart, you will notice several values that are printed out on the upper left corner. One of those values is the number of positions for the current symbol. Would you risk $100 to make a dollar or would you rather risk a dollar to make $100?

I think most people would prefer the second option. But this is only half the story.

When I was a boy, my little chess computer was able to beat me every time, it could calculate every possible move within seconds. And that was about 40 years ago.

I wish I could say that I never lost, but what I can say is that I never lost enough to get into trouble. And I am still getting smarter with each automated trade.

Sadly, most traders want to go all in and that is one of the reasons why most people fail. When something unpleasant happens, you are the one who will make something that you will consider to be of quick improvement.

Do you expect to always make a profit with everything you do? In my eyes, that is like hoping to take a trip with your car and having all the traffic go out of your way.

Think of a car on a frozen lake. You would need to use the steering wheel very carefully or your car would start to drift and break out of the course. If you have a big base rate, it is possible to improve the quality of your assumptions and that can help you to improve your results and get above average probabilities. What if you have no trading money now? No problem.

If you could build a trading system that actually works for you, would you be able to come up with $300 if you wanted to? I often reverse my original idea. For example, I increased the take profit points and now I would do the opposite and decrease them. Why would you do the opposite of what you thought could be a market advantage? Because if I found a real market advantage, I should be able to measure it.

Do you agree to that? I turn off my demo systems from time to time or I cut the internet connection just to see what happens.

Testing outages and problems is exactly what demo accounts are for. Some beginners think that demo accounts are a waste of time because they want to make real money right away.

There is some correlation. You can see that different entry signals will create different results for the same currency pair. But this is not as important as most people think.

A good question is how you could improve your results even more. And that is also how it has been done in automated trading. Brokers offer bonus programs to make you go all in right away.

It is just a point in time. When you look at the stats, your brain will only spend half a second to decide if a system is good or bad. But I believe it is all about the results in the long run. There are also years when you need to be much more careful. You never know until you measure it.

A mental shortcut is useful for some situations in our life, but it is not good for trading profits.