Latest Trading News from all around the world

Novice Forex Traders Misunderstand Potential Trading Profits

August 10, 2018 August 10, 2018 Craig Anthony

It can often be very tempting as a first time and completely novice Forex trader to be fixated with the profits that can be made when you start trading at any Forex Brokers site, for often you will see huge profits available eon some trading opportunities.

However, what those inexperienced traders do need to be fully aware of is the maths behind those profits, for keep in mind that most trading opportunities that will be available to you at a Forex Brokers site offer a 50/50 outcome.

But when you see for example a Forex Broker offering you pay-outs 86% for example then you should be aware that the actual pay-outs profits from any 50/50 outcome are of course 100%, so for example if you place a 100.00 trade and it is a winning one then you will get 100.00 back as your invested amount and if the true pay-out odds were being offered your winnings would be an additional 100.00 on a true payout basis.

Obviously a betting site does need to make a profit, much like a bookmaker does, and as such when the pay-outs are 86% then the winning pay-out on a  100.00 investment will be your 100.00 stake returned and your profit of 86.00.

Over-Round

The best way of working out the profit a Forex Broker is expected to make from any trading opportunity they offer is known as over-round and in out example above they are paying out 86.00 to winning traders when the actual pay-out should be 100.00.

Therefore, they are going to make 14.00 profits from that trading opportunity alone, and if the pay-out odds on the opposite outcome are also 86% then on a well balanced trade they cannot lose and are making some 14.00 for every 100.00 traded!

Compare the Profit Potential of Any Trades You Place

The only way that are a Forex Trader who wants to place any type of Forex Trades on any given day of the week is by becoming one who is prepared to spend quite some time comparing the potential pay-outs and profits being offered do you at a range of different Forex Brokers.

As soon as you do so then you will soon realise the pay-outs offered to you at different trading sites can and will vary, and the onus is always going to be n you to track down the very highest payouts possible.

About The Author

Craig Anthony

Contributor

Craig Anthony has been trading Forex for many years now online and therefore is in one of the best positions possible to alert our readers of any potential problems they could experience and also enlighten readers on any additional innovations that will make their trading experience much easier.

Leave a Reply

Your email address will not be published. Required fields are marked *