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Now, there is quite a bit that goes into become a consistently profitable Forex trader. So, we aren’t going to go into ALL of the details in this short lesson. But, I am going to give you a general outline of what I feel is the most important piece of the puzzle of making your Forex trading business profitable.

As I mentioned above, you’ll have to make sure your winning trades are more than offsetting all your trading costs if you want to be a profitable trader. So, there are basically two ways to accomplish this:

1) Have a very high percentage of winning trades compared to losing trades

2) Aim to have winning trades that are significantly larger than your losing trades.

Most traders with a little live account trading experience would agree that it’s a lot easier to use option number 2. What we are essentially talking about here is risk reward. If we aim for a risk reward ratio of 1:2 on every trade we take, we only need to be right about 35 to 40% of the time to make a decent profit. Most professional traders are not winning a high percentage of their trades like 70 or 80%, instead they typically win somewhere around 40 to 60% of their trades. But, they understand that by making sure their winners outpace their losers by a substantial margin, they can reduce the burden of having to win a high percentage of the time.

One thing that’s especially important to remember is that you don’t have to be right to make money trading. What that means is that you can be wrong more than you are right and still make money in the markets. Given that it’s difficult to win a high percentage of the time in the markets, it’s far better to just use the power of risk reward and make sure your winning trades far out-pace your losing trades.

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