Trading can seem contradictory. To those looking in from the outside it might seem to have a strong gambling element, but of course a gambler’s approach is anathema to the professional trader. You learn a little more about trading and then realize that trading is about discipline and that capital preservation is the principal concern, and only then capital growth. “It’s the trades you don’t take that are key to your capital growth”, is a mantra that amateurs are encouraged to bear in mind. Just when you’re getting your head around that you may then hear that being too cautious is equally counter-productive. It can all seem confusing. Well, the truth is that it’s not, because if you’re able to develop a good sense of discipline in your trading then it literally becomes a ‘no brainer’, i.e. you don’t have to think or worry about whether to take a set-up or not. If a trade fulfills a set of rules that you have developed as part of your trading strategy then it’s there to take, equally if it doesn’t then you leave it. There is no shall I, shan’t I... Your trading strategy determines it for you.
It’s natural, for most of us, to approach uncertainty with caution, particularly with regards to money. We are hard wired to be cautious about money and fearful of losing it. For those new to trading it seems to be an area wracked with uncertainty and so not surprisingly it is natural to be very cautious. While caution is an excellent trait in trading, it becomes counter productive when it leads to indecision and not placing trades for fear of losing.
It’s therefore important to work out if a fear of losing is actually affecting your trading. A well kept trade journal will reveal all where, amongst other things, you carefully note the reasons why you took or didn’t take what appeared to be a potential trade setup. If your notes reveal indecision or uncertainty too often then it’s likely you’re sense of caution is getting in the way of your trading. This, of course, does not mean that you declare open season on any trade that looks vaguely like it might be going in the direction you would like, far from it. It’s simply that your carefully planned trading strategy, which will have been thoroughly back tested, dictates to you whether a trade should be taken or not. In effect, the decision is taken out of your hands.
It’s natural, for most of us, to approach uncertainty with caution, particularly with regards to money. We are hard wired to be cautious about money and fearful of losing it. For those new to trading it seems to be an area wracked with uncertainty and so not surprisingly it is natural to be very cautious. While caution is an excellent trait in trading, it becomes counter productive when it leads to indecision and not placing trades for fear of losing.
It’s therefore important to work out if a fear of losing is actually affecting your trading. A well kept trade journal will reveal all where, amongst other things, you carefully note the reasons why you took or didn’t take what appeared to be a potential trade setup. If your notes reveal indecision or uncertainty too often then it’s likely you’re sense of caution is getting in the way of your trading. This, of course, does not mean that you declare open season on any trade that looks vaguely like it might be going in the direction you would like, far from it. It’s simply that your carefully planned trading strategy, which will have been thoroughly back tested, dictates to you whether a trade should be taken or not. In effect, the decision is taken out of your hands.
Editors’ Picks
EUR/USD flat lines near 1.1750 ahead of ECB policy decision
EUR/USD remains flat after two down days, trading around 1.1750 in the European session on Thursday. Traders move to the sidelines and refrain from placing any fresh directional bets on the pair ahead of the ECB policy announcements and the US CPI inflation data.
GBP/USD stays defensive below 1.3400, awaits BoE and US CPI
GBP/USD oscillates in a narrow band below 1.3400 in European trading on Thursday. The pair trades with caution as markets eagerly await the BoE policy verdict and US consumer inflation data for fresh directional impetus.
Japanese Yen languishes near weekly low against USD; focus remains on BoJ policy update
The Japanese Yen trades with a negative bias against the recovering US Dollar for the second straight day, pushing the USD/JPY pair closer to the 156.00 mark or the weekly top. In the absence of any fundamental catalyst, the downtick could be attributed to some repositioning trade ahead of the crucial Bank of Japan policy update on Friday.
Editors’ Picks
EUR/USD flat lines near 1.1750 ahead of ECB policy decision
EUR/USD remains flat after two down days, trading around 1.1750 in the European session on Thursday. Traders move to the sidelines and refrain from placing any fresh directional bets on the pair ahead of the ECB policy announcements and the US CPI inflation data.
GBP/USD stays defensive below 1.3400, awaits BoE and US CPI
GBP/USD oscillates in a narrow band below 1.3400 in European trading on Thursday. The pair trades with caution as markets eagerly await the BoE policy verdict and US consumer inflation data for fresh directional impetus.
Gold awaits weekly trading range breakout ahead of US CPI report
Gold struggles to capitalize on the previous day's move higher back closer to the $4,350 level and trades with a mild negative bias during the Asian session on Thursday. The downtick could be attributed to some profit-taking amid a US Dollar uptick, though it is likely to remain cushioned on the back of a supportive fundamental backdrop.
BoE set to resume easing cycle, trimming interest rate to 3.75%
The Bank of England will announce its last monetary policy decision of 2025 on Thursday at 12:00 GMT. The market prices a 25-basis-point rate cut, which would leave the BoE’s Bank Rate at 3.75%.
US CPI data expected to show inflation rose slightly to 3.1%, cooling Fed rate cut bets for January
The US Bureau of Labor Statistics will publish the all-important Consumer Price Index (CPI) data for November on Thursday at 13:30 GMT. The CPI inflation in the US is expected to rise at an annual rate of 3.1% in November
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