# Mathematics in trade. Simple formulas for TS analysis.

101,000 I know that in order to be successful in trading, you need to constantly raise the level of financial education. The more a trader knows about the market, the better the chances he will have to make forex trading the main source of good income. The pursuit of learning is especially important for novice entrepreneurs. In addition, they should be able to properly analyse the results of their transaction. This will allow timely detection of errors and optimization of the trading system. **The **lived for a long time. And today I want to tell you about two simple formulas that traders use to assess the degree of risk and effectiveness of trading. They will be especially useful for novice traders who develop and test their own trading strategy.

## Payout

Traders, even with little trading experience, understand that without unprofitable trades you cannot do so. The trader’s task is to minimize potential losses, i.e. reduce the risk in trading. One of the most important indicators of the degree of risk for a given vehicle is the payout.

To evaluate your strategy, you need to calculate the maximum payout for a specific trading period. It represents the maximum amount of loss in relation to the maximum amount of the deposit that was determined during the analysis period.

Draw loss formula looks like this:

MPG maxD – minD / maxD

MP – this is the maximum payout;

maxD – maximum deposit;

minD – minimum deposit.

Example:

Let’s say that at the beginning of the analyzed period, the amount of funds in the trading account was $12,000. At the same time, after several unprofitable transactions, the amount per deposit fell to $9,000, and then the trader managed to increase the deposit to $18,000. The maximum payout in this case was: $18,000 – $9,000/$18,000-50%. The lower the percentage, the higher the effectiveness of the trading strategy.

## Multiple R

The name of this formula may seem wise to someone. But it’s actually even simpler than the one I told you above. Short R represents the profitability-risk ratio in each trading transaction. If the trader expects to receive a profit in a trade three times the size of a possible loss, the multiple R shall be 3. If the trader has set the trade to take a profit of 50 points, and stop-loss – at the level of 100 points, in this case the multiple R will be equal to 0.5.

of course, **methics in trade** is not limited to these formulas. There are many of them. But you need to master them gradually.

Inga Fedorova

13.02.2021

Recording of mathematics in trade. Simple formulas for analyzing TS. Forex | The magazine first appeared on forex-for-you.ru.