Forex: A Game of Probability

Filed under: Learn Forex Trading |

Trading the foreign exchange markets is not a game of certainties. This is a hard for the human mind to take. We like certainties. We like to know that the sun goes down at night and it will rise again in the morning. We like to know that our favorite soap will be on TV at 7:30, and not 7:37, or 8:13. So putting your well-earned money on a trade and watching with uncertainty as it ebbs and flows is not an easy thing to do. But it is important to remember, at all times, that trading the forex market is a game of probabilities – and the best thing that we can do is tip the odds in our favor.

 

If you can find a market edge (like price action trading) and follow through with your game plan consistently, then you will be on the road to success in the markets. You may lose in the short term, but in the long term, as long as your edge is valid, you will be profitable. You must plan and expect short-term fluctuations in your equity curve, and learn to deal with these inevitable drawdowns. This is not unlike the world of professional gambling – whereby a punter will find an edge in the market and exploit it over a long series of bets while protecting his bank with good money management practices. This is not gambling, as gambling is random and there is no edge present.

 

I find it best not to watch my trades once they are on too much, as it can be a painful and frustrating experience. It is a good idea to take as much emotion out of your trading as you can. Therefore, the best thing you can do is stick to your game plan, exploit your edge, and remain as unemotional as you can. Do this, and you’ll not be doing too badly.

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