The Professional Forex Trading Course – Lesson 8 - Psychology - Part 1

in #money6 years ago (edited)

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Psychology is more Important than Strategy

  • Winning traders are different NOT because of the indicators or technical knowledge they have. What makes them different is the mindset they have towards trading.

  • The best strategies and indicators will not help you succeed if you have the wrong mindset towards trading.

  • Many traders constantly search for the 'Holy Grail of Trading'. A special secret strategy / indicator that can predict the market and win all the time. Does it exist ? NO

  • The secret to successful trading does NOT lie in an amazing theory or indicator. The secret lies the traders' MIND.

Psychology of Winning Traders

1.Discipline

  • Trade according to your trading entry / exit rules. Never on rumours, opinions and emotions.

  • Have the discipline to stick to your strategy through the wins and losses

  • Avoid listening to the opinions of 'experts' who can 'predict' the market based on insight or news.

2.Think Statistically

  • A winning strategy will have wins as well as losses

  • The losses can come in a row (5-10 losses together)

  • Do not be greedy when you win or fearful when you lose

  • Every trade outcome is statistically insignificant

  • A good trade can end up as a 'loss'. Focus on following the rule and not on the outcome of each trade.

  • As long as you have an edge (> 50% win) and average win is more than your average loss, you will be profitable over many trades.

3.Patience

  • Only trade when there is a high probability opportunity

  • When the rules tell you it is not the time to enter, do NOTHING

  • Knowing what NOT to do is as important as knowing what to do

4.Focus on 'What' is happening and not 'Why' it is happening

  • It is a waste of time trying to figure out why the market is moving a certain way

  • Price movements are not caused by public news (e.g. Yen increased because of North Korea firing missile)

  • Avoid associating market trends with news events

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