In trading, the mantra etched into the back of our minds is, ‘keep it simple, less is more’. Always pare it right back, emotionally and technically. Don’t get bogged down in predictions and over analysis; just execute a proven strategy when the signals tell you to. There are plenty of voices out there espousing forecasts. We traders must block our ears to the clamouring that can pull us in multiple directions and focus on the business of identifying only the best set-ups, then execute them and let the market do the rest.
So we trade with conviction, with belief in the validity of our strategy, but that is all. We don’t extrapolate this to conviction about the outcome of our trade. Our conviction is focused, not far reaching. It is about the strategy and set up, not about the outcome. If our conviction in a trade extended to its outcome then we could quite possibly find ourselves on a nasty losing position, hanging on with firm conviction that it would come good in the end. Many have come unstuck with that approach. It is conviction in your strategy that tells you when (and how) to get out, as well as when to stay in. It has nothing to do with conviction in the outcome.
Of course news can dramatically affect the market, but no matter how great a storm is whipped up a focused conviction in our strategy will mean that we can ride it, taking advantage of set-ups and opportunities to ride a wave. Conviction that the market is about to spiral or charge through the roof is not in itself a valid reason to jump on a trend or reversal. Yes, we trade the news, but we play the reaction.
Trading is often touted as a means of making a quick buck. Many have come unstuck trying to do just that. This is not to say that it is particularly difficult, it just depends where your conviction lies.
So we trade with conviction, with belief in the validity of our strategy, but that is all. We don’t extrapolate this to conviction about the outcome of our trade. Our conviction is focused, not far reaching. It is about the strategy and set up, not about the outcome. If our conviction in a trade extended to its outcome then we could quite possibly find ourselves on a nasty losing position, hanging on with firm conviction that it would come good in the end. Many have come unstuck with that approach. It is conviction in your strategy that tells you when (and how) to get out, as well as when to stay in. It has nothing to do with conviction in the outcome.
Of course news can dramatically affect the market, but no matter how great a storm is whipped up a focused conviction in our strategy will mean that we can ride it, taking advantage of set-ups and opportunities to ride a wave. Conviction that the market is about to spiral or charge through the roof is not in itself a valid reason to jump on a trend or reversal. Yes, we trade the news, but we play the reaction.
Trading is often touted as a means of making a quick buck. Many have come unstuck trying to do just that. This is not to say that it is particularly difficult, it just depends where your conviction lies.
Editors’ Picks
EUR/USD flat lines around 1.1900; looks to US NFP report for fresh directional impetus
The EUR/USD pair is seen oscillating in a narrow trading band around the 1.1900 mark during the Asian session on Wednesday as traders opt to wait for the release of US monthly employment details before placing fresh directional bets.
GBP/USD slips back to daily lows near 1.3640
GBP/USD drops to daily lows near 1.3640 as sellers push harder and the Greenback extends its rebound in the latter part of Tuesday’s session. Looking ahead, the combination of key US releases, including NFP and CPI, alongside important UK data, should keep the pound firmly in focus over the coming days.
USD/JPY extends three-day rout below 154.00, NFP eyed
USD/JPY is extending its three-day rout below 154.00 in the Asian session on Wednesday, awaiting the release of the closely-watched US NFP report. In the meantime, rising bets on Fed rate cuts keep the US Dollar depressed. In contrast, expectations that PM Takaichi's policies will boost the economy and allow the BoJ to stick to its hawkish stance underpin the Japanese Yen, weighing on the pair amid intervention fears.
Editors’ Picks
AUD/USD hits fresh three-year highs above 0.7100 on hawkish RBA-speak
AUD/USD has refreshed three-year highs to regain 0.7100 and beyond in Wednesday's Asian trading. The pair remains undeterred by the mixed Chinese inflation data for January, which showed the growth in the Consumer Price Index slowing more than expected, while the Producer Price Index beat estimates. RBA official Hauser's hawkish commentary provides an extra boost to Aussie bulls.
USD/JPY extends three-day rout below 154.00, NFP eyed
USD/JPY is extending its three-day rout below 154.00 in the Asian session on Wednesday, awaiting the release of the closely-watched US NFP report. In the meantime, rising bets on Fed rate cuts keep the US Dollar depressed. In contrast, expectations that PM Takaichi's policies will boost the economy and allow the BoJ to stick to its hawkish stance underpin the Japanese Yen, weighing on the pair amid intervention fears.
Gold awaits US Nonfarm Payrolls data for a sustained upside
Gold remains capped below $5,100 early Wednesday, gathering pace for the US labor data. The US Dollar licks its wounds amid persistent Japanese Yen strength and potential downside risks to the US jobs report. Gold holds above $5,000 amid bullish daily RSI, with eyes on 61.8% Fibo resistance at $5,141.
Bitcoin, Ethereum and Ripple show no sign of recovery
Bitcoin, Ethereum, and Ripple show signs of cautious stabilization on Wednesday after failing to close above their key resistance levels earlier this week. BTC trades below $69,000, while ETH and XRP also encountered rejection near major resistance levels. With no immediate bullish catalyst, the top three cryptocurrencies continue to show no clear signs of a sustained recovery.
Dollar drops and stocks rally: The week of reckoning for US economic data
Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.