The first thing to know is the winning percentage and the profit-loss ratio:
Winning rate is a data calculated by counting the number of gains and losses after multiple transactions and dividing the total number of gains and losses by the total number of gains and losses, which belongs to the category of post-event summary.
The profit-loss ratio considers the expected future profit-loss points before the transaction is placed, and the expected profit points divided by the expected loss points is an estimated data. After the resumption, it will be calculated by dividing the take profit point by the stop loss point. Generally, there will be a lot of consideration when making a decision, and statistics will be made when the offer is resumed afterwards.
Back to the original point, the foreign exchange market is the ratio of currency pairs in various countries, just like 1 US dollar can be exchanged for 6.52000 RMB, and only one exchange rate is traded.
Because the exchange ratio will change with the passage of time, there will be a spread in the change, and foreign exchange transactions often use this spread to make profits.
Everyone engages in foreign exchange trading for different purposes, some to stabilize the exchange rate, some to hedge risks, and some to make profits.
As far as speculative profits are concerned, the winning rate and profit-loss ratio are only factors to be considered, and they are not directly related to the final price difference and profit. But psychologically, I hope to make a 100 order, the winning rate is 100%, and the profit-loss ratio is 100: 0. However, from the actual situation, it is of little significance to simply pursue winning percentage and profit-loss ratio. The ultimate goal is to make more and more funds in the account, and all kinds of pursuits that are inconsistent with the ultimate goal are a waste of time, energy and money.
Everyone's trading style is different, and their favorite indicators are different.
Take day trading as an example. Trading hundreds of orders every day, the profit-loss ratio of each order is not high, but the overall winning rate is high, and the account amount is still increasing every day.
But for medium and long-term trading, there are not many trading orders, and there are not many trading orders in a month or even a year. Among them, you may have made only one order and lost everything else, but if you subtract the sum of all the loss orders from the profit of this order, there is still a very rich profit. Just as Soros once summed up his trading experience: the depth of profit is far more important than the frequency of profit.
Therefore, before foreign exchange trading, you should know what you are ultimately pursuing and what kind of trading style you are, and then consider which indicators are the most important. Instead of simply pursuing indicators, it is better to know yourself first, otherwise you will drift with the tide and be taken away by the market. Just like a roller coaster, your heart is being tested all the time.
Trading is just a part of life. It may be fun, or it may be a tool for making a living. All activities that make life better should be encouraged and supported.