Lose The Need To Be Right In Forex Trading!

One of the most damaging mindsets that a new trader can have going into the trading arena is an expectation to be right all (or even most) of the time. Let me explain.

From the day we enter school, we're taught that we need to be right most of the time. Maybe not in so many words, but it's implied. You get rewarded for getting high marks, and you get held back or even punished for not doing so well.

Forex Trading Pip

In trading, this attitude is a killer, believe me. Trading is a different animal! You absolutely do NOT have to be right very often to do make money consistently in trading.

What you need to understand is that being wrong and having losses are part of the deal in trading. EVERYONE has losses. But how you react to them will be a determining factor in your destiny as a trader. What does it mean to you to have a loss? Do you feel stupid? Do you feel like "they" got you (whoever "they" are)? Do you think that if only you'd done a little more research, or if you learned more, then you wouldn't lose so much? Wrong, wrong, and wrong.

See, it doesn't matter how smart you are, how positive your outlook is on a trade, or how much research and analysis you've done to reach the conclusion to buy or sell. None of this matters. You can still have all the greatest reasons in the world as to why a trade has to work out positively, yet it can still lose, no problem.

So why is that? How can we do so much great research, and technical analysis, and still have a loss? Well there are a lot reasons, but the main one is that we just never know what's going to happen next when we put a trade on! That's because every single trade is unique! There are different opposing traders, different volumes of traders, possibly a large bank or financial institution deciding to make a trade against our position just when we also decided to trade, and on and on.

Understand this, accept, and embrace it, you can start to work toward that care-free state of mind where your focus can make that critical shift from thinking, "I sure hope this trade makes money", to "Who knows what's going to happen, but what a nice set up. If it doesn't go in my favor, it's no problem because of my impeccable risk management". This is how winners think.

Trading is an odds game, pure and simple. Find a pattern that has a higher probability of one thing happening over another, and you have what's called an "edge".

This is what casinos have with every game in their casino. They don't have games where the odds favor the player. In trading, you can be the casino if you have the right attitude.

And actually in trading, we have an even better situation, because the amount we can win, with any size bet (trade size), is not limited like it is in a casino. We can take a trade in the forex with just a 20 pip risk, and make 200 pips! Structuring a trade with very favorable reward to risk ratios is a key to success in trading.

I'll just end this with a great example of how unimportant being right is, and admittedly this is a bit of an extreme example, but it's a stark illustration of what I'm talking about.

A forex client of mine had a month of trading where he had 18 trades. No less than 13 of them were.....losses!! (How would you feel about that)? 3 of the trades broke even, and he only won on 2 trades out of the 18! And his results for the month? His account was UP +3.8%!

If he had only been right 2 times out of 18 back in school, he would have been considered, well, really stupid! He is now a fund manager for high net worth individuals, and achieving very nice results.

This guy has become one of the best risk managers I've ever worked with. The losses he had were super small, yet the profits were huge by comparison, resulting in an overall gain.

So, the bottom line is "do you want to be right, or do you want to make money". In trading, there's a big difference.

All the best!

Vic Noble.

Lose The Need To Be Right In Forex Trading!

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