Forex traders often make the mistake of trying to win more and lose less often. But the reality is somewhat different. the fact remains;
You can’t make winning trades by avoiding taking trades. You can’t magically NOT take a losing trade.
If you focus on avoiding losing, you will not increase your chances of winning by a big margin. You will simply REDUCE your trading activity.
The way to trade and make money is to take as many trades as it is possible and reasonable to do so as per your statistically proven trading strategy and plan.
The way to make consistent profits is to have a trading system with an edge and apply the edge every single time.
If you pick and choose, you might avoid some losers but you will also avoid some winners. Why?
Because Trading is nothing but a pattern recognition numbers game. And because for any given set of variables that define an edge, Winners and Losers are Randomly Distributed.
I remind myself of the 5 Fundamental Truths.
Thanks to Mark Douglas, he did a great job. Trading in the Zone is worth a read. Excellent trading psychology book.
1. You don’t need to know what is going to happen next in order to make money.
2. Winners and losers are randomly distributed.
3. A Trading Edge is nothing more than an indication of a higher probability of one thing happening over another
4. Anything can happen
5. Every moment in the market is unique
These are the 5 fundamentals FACTS of the market.
So, in order to make money in the MARKET, have a trading system with an edge, understand the 5 fundamental truths and LIVE your trading life by the 7 Principles of Consistency.
The 7 Principles of Consistency:
Recite this every day. You might find it weird in the beginning but after a while, it will really start to make sense and sink in. I have this printed and laminated years ago and it still stays with me till this day.
- I objectively identify my edges.
- I predefine the risk of every trade.
- I completely accept the risk or I am willing to let go of the trade.
- I act on my edges without reservation or hesitation.
- I pay myself as the market makes money available to me.
- I continually monitor my susceptibility for making errors.
- I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.