Often new traders come to the market with many false beliefs about what is needed to make money consistently in the markets. This article will explore some of those false beliefs and how you can fix them to become a successful trader.
False Belief 1 – I need to watch the markets as much as possible
This is a very common belief that many new traders find themselves falling into. Quite simply trading does not have to involve long hours staring at the screen and many traders actually find that once they begin to cut back their screen time their success rate climbs.
Traders need to identify when is the best time to place trades and then step away from the screen.
An example of this might be a trader that trades off the 4hr chart. They may choose to look at the charts and scan for trades during the US and UK sessions when the 4hr candle closes. If they find a trade they place it and set stops and targets and then turn the computer off until the next 4hr bar closes. If there is no trade to place they simply turn the computer off until the next 4hr bar closes and they scan again for trades.
Watching the markets endlessly will not produce any more trades for you to enter compared to scanning at a set time. Continually watching the markets will wear you down and make you a lot more likely to over trade. The feeling of wanting to be in a trade just for the sake of it is hard to fight when you are just watching the market endlessly.
Many traders believe that placing indicators on their charts give them a great chance of picking the right side of the market. The problem with this is indicators are built off what price has done or off old price data. What does this mean? It means traders who use any indicators at all, are using old price to predict what may happen in the future. This may sound crazy but it’s true!
All that’s needed to trade successfully and to consistently make money is simple Price Action. Price Action is the key to all moves in Forex. Price Action is people’s behavior placed on a chart for us to analyze. As all indicators are made of old price information, it makes sense to use the current live price information to base our trading around.
False Belief 3 – I can’t be wrong
Traders often look at trading as a matter of being right or wrong on each particular trade they take. I prefer to look at the market as a random event. I can never know for sure no matter how good the setup looks that it will work! I try to take only the best setups but does that mean they are all winners? No, the outcomes are random! I make money consistently month after month because I know I have an edge on the market that produces more winning trades than losers over a span of time. I may lose 3 trades in a row but I know over 30 or 40 trades I will always be up. Start forgetting and stressing over this trade and the trade the just went past. You are not right or wrong. Trading Forex will always produce a random result.
False Belief 4 – I have to analyze every little thing and know everything inside out
Whilst it is good to be a master at the method you trade you do not need to know about every little thing. People often come unstuck falling into analysis paralysis. They can never believe that things can be simple and more than that, making things simple is the way to success and profitability.
SIMPLE is the way to go. Pick just one method to trade with such as Price Action and perfect it. Do not try to involve 100 methods with 10,000 indicators and just as many timeframes! Keep it simple and perfect you’re one chosen craft!