By virtue the financials markets are a zero sum game. Someone has to loose in order for the other to win and this is one of the most fundamental aspects of any financial market any where in the world. It is certainly true in the case of forex markets as well.
If we say that forex is a zero-sum game, this essentially means that the probability for either side to win is 50% at any given point of time. It would not be wrong to say that as a trader your task is to increase this probability from the 50% that is already available with you. Hence all the countless hours spent trying to understand charts, reading books, following gurus and blogs like this one :) will go in vain if you end up decreasing this probability instead of increasing it.
Sadly only one in twenty people win over the long term in these markets and evolve themselves into successful traders. Each one of these traders, have over a period of time learnt the art of looking at probability as one of the essential constituents of any successful trade.
If we blindly initiate a trade, we have a 50% chance of winning it. The more confirmations we seek in a trade setup eg. PinBar, Support & Resistance Levels, Pivots etc. the healthier our probability gets for that particular trade.
But an interesting point to note based on the stats in the above two paragraphs is that 19/20 of us end up decreasing rather than increasing this probability. So, Is it safe to say that coin tossing has better odds rather than forex trading? Absolute, no. It is our poor trade management practices and psychology which eventually
cripple this probability and make us loose a winning trade.
From next time onwards, whenever you enter a trade 1) Try and always look at the multiple confirmations to increase the probability of your trade setup 2) Trade Management and Trade Psychology is much more important (we will talk about this in a later post) than entering and exiting a trade.
Till then, Happy Trading!!
Fidelis Capital Markets : https://www.fideliscm.com
If we say that forex is a zero-sum game, this essentially means that the probability for either side to win is 50% at any given point of time. It would not be wrong to say that as a trader your task is to increase this probability from the 50% that is already available with you. Hence all the countless hours spent trying to understand charts, reading books, following gurus and blogs like this one :) will go in vain if you end up decreasing this probability instead of increasing it.
Sadly only one in twenty people win over the long term in these markets and evolve themselves into successful traders. Each one of these traders, have over a period of time learnt the art of looking at probability as one of the essential constituents of any successful trade.
If we blindly initiate a trade, we have a 50% chance of winning it. The more confirmations we seek in a trade setup eg. PinBar, Support & Resistance Levels, Pivots etc. the healthier our probability gets for that particular trade.
But an interesting point to note based on the stats in the above two paragraphs is that 19/20 of us end up decreasing rather than increasing this probability. So, Is it safe to say that coin tossing has better odds rather than forex trading? Absolute, no. It is our poor trade management practices and psychology which eventually
cripple this probability and make us loose a winning trade.
From next time onwards, whenever you enter a trade 1) Try and always look at the multiple confirmations to increase the probability of your trade setup 2) Trade Management and Trade Psychology is much more important (we will talk about this in a later post) than entering and exiting a trade.
Till then, Happy Trading!!
Fidelis Capital Markets : https://www.fideliscm.com
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