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technical jargon
personality characteristics
higher intelligence
beating around the bush
forex traders
single way
forex trader
answering the question
trading forex
In Forex, It Is Better To Be Profitable Than Being Right
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In Forex, it is Better to Be Profitable Than Being Right

Ask any forex trader and their ultimate goal is to achieve overall trading success and being profitable from their trades. Contrary to what one might get to read over the Internet now a days, there is no single way, let alone a silver bullet (read as EA's or other automated systems) that will do the trick. However, there are some general and basic tenets in forex trading that almost all successful forex traders comply with duly. Of these, one that we shall discuss about is losing your ego in a forex trade.

Ego is one of the most biggest obstacles for forex traders. It must be stressted that traders must out aside their egos even before they take a position on a trade. It often comes down to survival even before you can succeed as a forex trader. Trading forex is not that simple as it is made out to be, unless for a couple of dollars in profits, but in the long run success in forex trading takes a lot of hard work and commitment.

This brings us to the topic of discussion about being profitable rather than being right in a forex trade. Most traders, when asked a simple question to state the price direction of a currency pair for example are give to quote various sources and speak in technical jargon and a lot more of beating around the bush before answering the question. This is ego in play. A successful trader would simply state that they had no answer to that.

Forex trading is not about predicting the price movements but rather is a case of probabilities and past price movements history. It is assumed that forex traders usually have an intelligence that is beyond the average and are considered to have aggressive personality characteristics. Often known as Type A personality. While having a higher intelligence is definitely a plus in this case being too aggressive or having too big an ego can ultimately lead to a downfall. This is simply because Type A personalities usually don't like to lose and from a forex trading perspective, it gets difficult over time for traders who continue to see a flow of losing trades.

One of the key elements to a profitable forex trade is to cut your losses but at the same time let your winning trades rally. Generally speaking if you consider a forex trader's trades over a period of a year, there would be noticeable more losing trades than winning trades. However not all is lost as potentially there is profit to be made from losing trades as well by getting out of them quick enough (one such method is to set your stop losses so you know the risk your trade can take before you call it a day). Similarly, when your trades are on an upward trend, then let them run free up until a point you think you have gained enough.

Putting this into perspective, if a forex trader, who for example has a larger than life ego, it can obviously be difficult for them to see a losing trade. Such kind of traders will go to any length just to be proven right. This eventually translates to a trader who opened a trade sure that it would go in the direction they assumed only to see it do the opposite. Finding it difficult to kill their ego, it gets difficult for such type of forex traders to get out of the losing trade at an early stage. So instead of using stop losses, such traders would in fact let the trade roll against them whilst hoping that they would be proven right.

Repeating such scenarios over and over again can potentially make you lose more than what you intended to make in the first place. Such type of forex trading personalities would eventually quit trading, find different reasons to blame; from the ecn forex brokers to the markets and so on.

Humility goes a long way, both in life as well as in forex trading. If you aren't humble enough yet, the markets will eventually humble you at some point in time and at a big price.

Street Talk

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