At the outset, being attracted for Forex Trading is needed to motivate the learning process of not only the strategy and tactical aspects but also the psychological trading preparation. You see, losing is part of being a successful trader and most human beings are wired not to like losing. It’s deep in our DNA. But with a solid Forex training program and months of finding the best system for you as well as gaining confidence in your system, the real test starts.
The very thing that attracted you to trading-the stimulation of change as well as the risk-reward rush-fades as a trader becomes more experienced. You see, to be a good trader, you need to become algorithmic in your approach to trading. What I mean by that is once you have an effective system, you need to stick with it and no second guessing, “breathing room” stops or gut reactions. Indeed, you must become mechanical….just like a black box. Trading then becomes a business and not a romantic dance with chance.
When I look back over my trading career, whenever I have a losing streak it is usually due to my inability to stay with my system. In fact, as any good trader, I track all my trades in my journal and have a code for all the typical errors or misjudgments I make…even with winning trades. Supposedly, this helps to analyze the trading system and trading methods. In my case, over 78% of my errors are a code 5. For me, a code 5 is “Did not follow system.”
We curious humans are always looking for connections and correlations…often when there are none. Technical indicators do provide some probabilities but those are based on the past. However, some technical evaluation can help us see patterns that may point to higher probability outcomes. For example, each Sunday, we have our Online Trade Planning review. Here, Mike goes over all the major pairs and identifies the pairs with the highest probabilities based on the spread between pairs. However, these observations are just a “heads up.”
As the future becomes now, prices move and that is where our real focus is. However, too often we can get caught in the rhythm of the chaos and slip away from the constraints we place on ourselves with our trading systems. Usually, this is when code 5 hits.
So, the temptation to move from thinking like an algorithm to thinking like a human being is a natural weakness that even the most experienced and successful traders are constantly battling with.
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