Consistency In Trading
Consistency in Forex requires us learning skills that most people are not used to learning. “Mental Skills”
Without developing the right mental skills, it is unlikely that we would be able to do what our trade plans tells us to do without making a no of potential execution errors.
No matter how good a technical method is at generating winning trades, turning those winners into a consistent income requires us to do or not do some things that the system itself cannot help us with.
E.g
1. Our method cannot force us to predefine the risk before getting into a trade.
2. Our method cannot force us to take a loss before it ends up becoming a bigger loss.
3. Our method cannot stop us from moving our stop loss close to our entry too soon where the market takes us out and then trades in our anticipated direction.
4. Our method cannot force us from hesitating and getting in too late.
5. Our method cannot stop us from getting in too early where our entry signal never truly develops
6. Our cannot stop us from getting out too early there by leaving money on the table.
7. Our cannot stop us from letting a winning trade turn into a losing trade without having taken any profits.
Understanding the Randomness of the Market.
All of the above mental errors are a result of thinking and believing that our technical method is telling us what is going to happen on a trade by trade basis. But technical methods are not designed to do that .they are meant to put the odds in our favor over a series of trades.
The outcome of the signals generated by a trading system on a trade by trade basis and random and unique
In other words there’s no way to know in advance what the outcome to any particular trade signal will be or what the sequence of wins to losses will be over a series of trades.
You need to understand that every moment in the market is unique hence you do not need to know what is going to happen next to make money. all you need is a plan that is Testable, Verfyable and Repeatable. and then just come into the market and repeat the same process day in day out.
Become a Contrarian Trader
If you want to trade your methodology in an effective fashion, to be able to utilize it in a way where by you can extract the maximum profit that it makes available based on a pattern that it identifies, you have to do it in certain ways. Your mind has to be free to stop you from making trading error. Those errors come from thinking that this trade or the next trade has to be a winner.
It is the trader who has learnt to think in probability that doesn’t encounter the same trauma the typical trader experiences. When you learn how price moves i.e. when you understand how to read a price chart then you understand how your technical method relates to the market movement and then you begin to understand that, when a collective pattern shows up, it simply means that there is a higher probability of the signal working out than not working out. The problem is that this patterns are based on some sort of mathematical model but what we fail to understand is that mathematical models cannot predict human behavior. So you could have an identical pattern as you did last time yet have two different outcomes.
Summary
1.Your overall success is defined over a series of trades and not on a trade by trade basis.
2. Learn to think in probabilities and you will do well as a trader.
3.A trading system is only as good as the person using it . Hence your success as a trader is not determined by your trading system but rather by state of mind of the trader using the trading system.
4.The successful trader you want to become is a future projection of your self that you will have to grow into. Growth is a process, it takes time but with the passion, patience and dedication, I believe anyone can make it to the 5% category of successful traders in the world.
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