Coin Tossing in the Forex Market, Random Trading for Learning

Well, I know many of you would think that I am completely crazy, talking about coin tossing inside the forex market. Most of you should know that gambling in the forex market is completely wrong, hence the saying, “if you are going to gamble in the forex market, go to Vegas, at least the drinks are free”. But I am not talking about gambling here, in fact, it is the complete opposite.

What I am going to explain here is a very good teaching strategy for people new to the forex market or people who want to improve their forex trading skills significantly. What you do is put a group of forex traders together and flip a coin to enter either buying or selling a given currency pair. Well, isn’t that gambling ? Actually, it is not. Gambling only happens in forex when one enters a position randomly and expects that position to be profitable.

This system works by letting a trader into a position using a random trade direction and then letting the trader decide how the position should be managed. Should it be closed with a loss ? how much is the stop loss ? how much is the take profit ?

Using this small exercise, traders in a group start to figure out the hardest thing to do in the forex market, which is getting out of your positions. This system in fact shows that someone can be profitable, even when entering the market at random, if their exit criteria is good. If you know the chances of a given position going into profit and know exactly what your profit target and loss areas are, you should be a profitable trader overall, even if your entries do not obey any particular logic.

Of course, the objective of this exercise is just to get traders to know exactly how to exit the market and is most effective when done in a group of people (each trader taking a different toss and then discussing their opinions). If you liked this article and would like to learn more about automated trading please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

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