Two Inevitable Facts in Forex Trading
There are two inevitable facts in forex trading , but unfortunately not many are aware of these two facts. Even if you really remember these two things then you will have the psychological ability to cope with post loss anxiety.
What are those two things? This is it:
- Unexpected things can happen at any time
This is the fact. Just face it. No matter how much effort you make in analyzing, no matter how sophisticated analytical techniques you use, you will not be able to really be sure how many percent that the market will move exactly as you wish. Confess.
Markets always find ways to surprise you, in both positive and negative terms. OK, we won’t discuss the positive surprises because everyone will be happy if they get a positive surprise from the market. What we are talking about is a shock in the form of a movement that is contrary to your will, perhaps against the backdrop of a central bank intervention, or maybe one of the main central bank governors is either in the wind what a dovish statement. Who knows?
For example, do you remember the incident in January 2015, when the Swiss National Bank gave a “surprise” to the market by removing the benchmark Swiss franc against the euro? Not to mention if we discuss natural disasters, or if North Korea suddenly launches a nuclear missile towards the United States. Kim Jong Un will not hold a press conference before attacking his enemy right ?
Unexpected things like this can cause market turmoil and it is very unlikely that you will know that will happen even if you are very detailed in paying attention to charts, economic calendars and monitoring the news at any time.
- Trading Is a Real Form of Opportunity Theory
There are two important things in “playing” the theory of opportunity in forex trading :
First, you must “make sure” that the position you are taking is in line with the current trend.
Second, you must realize that there is a possibility that the price will move against the position you take, even though based on the research the chances that you take the position will yield profit – say – 70%. That is, there is a 30% chance that your position will end with a loss. For this reason, risk limitation is needed.
For example, let’s say you see that GBPUSD is currently moving in the range of 1.00000. Suppose that level – based on analysis – is a strong support level and psychological support level.
You have realized that there is no way you can be 100% sure that the GBPUSD will rebound, but at the same time you can expect that the chance to rebound (bullish) is greater than the bearish opportunity because the 1.00000 level is strong support.
In a situation like this, it doesn’t really matter whether you are going to gain or lose, because you really understand that the decision you make is truly based on possibility.
You may experience losses and that will not be a significant problem for you, because after all you are already aware of these possibilities. Maybe you will also benefit, which you certainly expect.
So, whatever conditions you will find, it will not be too significant a problem. If it’s profitable, thank you. If you lose, you will move on easily.
Why can you move on easily?
Because from the beginning you have limited the risk. You place a stop loss properly and limit transaction volume by adjusting the number of lots based on position sizing calculations. You already have a mature trading plan. You are ready for all possibilities.
If you are ready to accept all possibilities, nothing will make you too disappointed.
So, never forget the tips we shared so that you can always trade forex without being haunted by a sense of deep disappointment.