Most newer traders come to the forex markets in the hopes of making money. While some will fall in love with the game and strategies involved in profitable forex trading, most beginning forex traders just want to push a few buttons and put some money in their pockets.

What these traders don't understand is the universally perverse nature of this business...

In order to make money forex trading online, Everything seems backwards! You need to buy when the market is weak and traders are pessimistic and depressed, and then SELL when the market is strong and traders are greedy and optimistic! (Remember how excited everyone was about the riches available in the housing market JUST before everything blew up and the crisis began?)

In the same vein most new traders are doing everything they can to find forex trading software tools and ideas to increase their win rate. I would argue that many traders will eventually find that
their most profitable forex trading strategies are those with the lowest win rate.

The reason for this tendency is the inverse relationship between risk and reward and win rates.

You can build a forex trading strategy with an extremely high win rate, but it will likely have a very weak level of profit per trade. For instance, if you risk $100 on a trade with a 60% win rate, it is likely that your average gain will be say $100-$150.

If you want even more accuracy, say 80% winners, then it is likely that your average gain will settle out nearer $50-$60 per trade.

On the opposite side, if you are wiling to lose 7 or 8 times out of 10, average gains of $400-$500 are possible!

Let's look at the math behind each extreme...

Let's assume you trade 100 times using a high accuracy forex trading strategy.

You gain $50 on the 75 winning trades and lose $100 on the remaining 25.

50X$75=$3750 in gross gains.

25X$-100=$2500 in total losses.

Most commission based brokers who offer forex trading online charge around $5 per $100,000 so we will estimate commissions of $500 for 100 trades.

So, $3750-$2500-$500=$750 in profits for all your work in spite of a 75% win rate! Now, let us look at a strategy on the opposite side of the equation...

Once again we will analyze 100 trades.

Except this time your forex trading strategy only wins 1 out of every 4 trades.

While this sounds terrible on the surface... Let's look at the math behind this low accuracy strategy.

Your win rate is only 25% because you are targeting larger profits from your online forex trading...

If your average gain is $400 then your results would be as follows...

75 losing trades of $100 = $7500.

25 winning trades of $400 = $10,000

$10,000-$7500-$500=$2,000 in profits!

So, as crazy as it sounds, you can see from the examples in this experiment it is more then TWICE AS PROFITABLE to trade a forex strategy that loses the majority of the time!

Who-da-thunk it??

So take a minute to revisit some of the forex trading strategies you have given up due to a low win rate... You might be pleasantly surprised by their longer term profit potential!

Bo Yoder (http://www.boyoder.com ) is a professional trader, author, and consultant to the financial industry on matters of trading and risk management. Bo is a frequent contributor to domestic as well as international trading publications, and can be seen writing for Technical Analysis Of Stocks And Commodities, Traders, and Active Trader Magazine.

In addition to his consulting, Bo is a featured speaker internationally at seminars and industry Expos' on matters of risk management and trader development. His first book and "Mastering Futures Trading" was published by McGraw-Hill in 2004, and his latest book "Optimize Your Trading Edge" was published in the winter of 2008.

His latest project is intended to help the latest generation of Forex traders radically increase their capital so that they may have the "ammunition" needed to pursue their trading careers. For more information on this innovative and proprietary trade management strategy, please visit the Cash Bomb ME! Blog at: http://cashbomb.me