Take Your Time: Forex Trading Needs Time to Digest
Aspiring Forex traders expect results, and they expect them quickly.
Any strategy which does not reduce risk to a 0% chance of a loss is a failure, and every loss means a potential end for their trading career.
What is the problem with this?
A strategy with no failures (losses) does not exist and will likely never exist.
Market conditions change constantly, and what did not work previously may work in a few days. Therefore, every loss is an opportunity to spot mistakes and flaws in your strategy; every time you fail a trade, you have the chance to improve your approach and risk taking.
With this in mind, let’s see why a certain mindset betrays traders progress.
Forex Is Never A Straight Line
Trading the Forex market should make you instantly discover that the market can be a roller coaster ride, up and down constantly.
A currency pair that gained more than 100 pips a day can plummet 200 the next.
Here is where digesting becomes an important word. You have price and the charts to try understand why it happened—or at least know which were the signs. Remember, the price depicted before your eyes is other traders and the simple demand and supply of the Forex pair or asset.
Anyone trading Forex needs to familiarise themselves with this fact quickly. Adopting a cold-headed objective approach and studying price is how you can potentially curb your risk. You do not eliminate it; you learn to coexist with it.
That is why risk management is a business constant, but one that can be managed by understanding that…
Every Trade Teaches You Something New
Whether you win or lose, a good trader can learn from every outcome.
A strategy is never optimal for all situations, so all trades let you evaluate why it worked or why it did not. When you plan, you do not have all variables, but once the trade closes, you do. As such, you become able to study it after real market conditions.
Expert traders become what they are because they analyse their actions after completion. Doing so lets you know what you need to change or keep in order to evolve and improve.
System Hopping Is Not A Strategy.
What novice traders do is that they forget a strategy after it has failed.
This is known as “system hopping” and means exactly that: traders keep switching approaches without stopping to see why they failed.
Even I was guilty of system hopping and it took a few years to understand that no strategy is correct all of the time. Once I got my head around that fact it become comfortable to lose some of the time. The reason I can say this, is because I back tested my methodology ‘The Able Method’ and remain confident that over the longer term time horizon I will remain net positive.
Risk varies all the time, so there are no 100% true strategies. A good trader can commit to their plans even after it has stopped working the same way for a period of time.
How? By adapting instead of discarding.
Take Your Time: Understand and implement Risk and Capital preservation.
You must preserve your capital to withstand the steep learning curve that comes with learning to trade Forex.
If you do not manage risk you will end up with no money in your account to trade with and of course the continuation of learning through experience, which in my opinion is the only way to learn.
All experienced Forex traders you come across will keep repeating that losing is part of winning, and that is for a very good reason.
While all trades teach you something, lost positions resonate more when it comes to learning and evolving. Because of that, lost trades are easier to sit down and analyse than winning ones.
Instead of switching out your strategy for another one, make it the only strategy and learn it inside out and rinse and repeat.
How can you do this?
Well, we can help you find the answer! All you need to do is sign up to our website and gain access to our extensive knowledge. With that, and our free e-book, you can be sure about having all the right tools to boost or start your Forex trading career.