One beginner takes a course in driving before he ever gets within the auto. He probably makes it to the following town too, perhaps after one or two wrong turns, maybe with a couple scratches on the paintwork, maybe a little late, but he arrives in the end. But the other newb jumps straight in the auto with no schooling, heads for the first road that he sees and ends up either in the wrong town or even more likely, in the ditch. And remember, that was the same car. In the same way we are able to take the same currency exchange system, give it to three different traders, and see three totally different results. Risk management is what’s most inclined to prevent us from finishing up in the ditch. Say you have a system that makes a median of 50 pips profit on winning trades and 30 pips loss on losing trades, including the spread. It’s obvious this is a good system.

But if you start out thinking you have got a fifty percent chance of success so that you can risk half of your funds on each trade, you would be making a massive mistake. 50% winners does not necessarily mean that every loss will be followed by a win and vice versa. Or you might have 5 losses followed by a win followed by another 5 losses. Later, of course, it would even up and you would have a run where there were more wins; but if you were placing 50% or 20% of your account balance on each trade, you would be wiped out long before the wins started coming in. At 10% the trader would potentially still be wiped out at some point. You can check this out against back tests, but always double the worst situation that you see because it is virtually certainly not the worst that would occur. You can see from this tract why it is important to take a currency trading tutorial of some kind before you start trading.