As you probably know already, the reason why traders lose money is because they become emotional while trading. This causes them to do illogical things like moving their stops further from their entry, not taking large profits when they are available in hopes of even bigger profits, closing out a perfectly good trade only because it moves against them a little bit, and many other less than logical things.
One big reason traders become emotional as they trade is because they get stuck in a cycle of trying to “figure” out what is going to happen next by analyzing the heaps of economic variables that affect the markets each day. The truth is that trying to analyze and make use of all the different economic news reports and other variables that affect a market on any given day, is just lunacy. When you sit at your computer for hours trying to find something to confirm your trade, you will probably find it, and you will also probably find something to invalidate your trade if you look long enough. While the Internet is amazing, it also floods our brains with more data than we can possibly make use of at any given time. So, it’s far better to just follow your trading system or strategy and ignore all the thousands of pieces of economic data that can affect the market each day.
The truth is that if you want to make money in the markets and forge the proper trading mindset, you have to trade like you don’t know what’s going to happen next…because you really don’t know. Traders who trade like they think they “know” what is going to happen in the markets end up losing money every time. The reason is because once you start thinking you “know” what is going to happen, you begin to get a sense of false confidence that drowns out the risk of trading the markets. You also begin to think that since you “know” what’s going to happen next, it’s in your best interest to meddle in your live trades and trade more often than you should. My set and forget forex trading approach allows a trader to manage their trades in agreement with the FACT that you do not know what is going to happen next in the markets, and accepting this fact and trading in line with it is the only way to make consistent money in the markets.
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