Don’t Forget These 2 Truths About Forex Trading

Face it. No matter how much effort you put in your analysis, you still won’t have a hundred percent accurate idea of where the market is headed.

Whether you win or lose at this point matters very little now since you have already acknowledged before you even took the trade that you are trading based on probabilities.

There’s always the chance that a surprise is waiting just around the corner, maybe in the form of a prominent CEO getting booted from the board or shockingly dovish comments from a central bank official.

Maybe.

2. Trading is a game of probabilities

Even if you watched the charts constantly, stayed on top of the forex calendar, and listened to the news every day, you still probably wouldn’t see those events coming.

Playing the probabilities in forex trading implies two important things:

• You must always make sure that the odds are in your favor before putting on a trade.
• The cost to find out if that trade is right must be compensated by probability.

Let’s say EUR/USD is trading at 1.1000, just testing a major support level. You know that you cannot predict where the price will go, but you do know that price has a higher probability of going up than going down since this support has strongly held in the past.

By keeping this frame of mind, you ease the pressure on yourself to always be right about what the market will do next or having to take a loss. In doing so, you overcome the fear of losing money, which is inevitable to every trader as losing a tooth is to every person.

In keeping these two “truths” about forex trading in mind all the time, you’ll gain a psychological edge and cope with losses better.

You may lose, which is okay because you have already expected it and know the costs associated with it.

Unless you’re Nostradamus…

Here are truths about forex trading that you may have forgotten:

1. Expect the unexpected

Feeling out of sorts from your recent losses?

Not only will you come to a point where you trade using probabilities, and not your ego, but you’ll do a better job of seeing what’s really moving the markets.