Trading is like Life!

Filed under: Learn Forex Trading |

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If you go through life without a plan, you may well get lucky from time to time – but in the long run, you will no doubt run into trouble. This is much like trading forex. If you go into forex without any kind of game plan, then you may get lucky in the short term and make some profits, but in the long term, you will inevitably blow up your account. So what other similarities can we make between life and trading and what can we glean from this?

 

Well, trading is all about taking calculated risks. You often hear me talking about risk-reward scenarios in my daily trade commentary. What most people do not think about is that life is all about taking calculated risks! When we cross the road for some milk, this is a calculated risk. We know that there is about a million to one chance of being hit and killed by a car every time we cross the road. But we also know that if we don’ get enough calcium, then our bones will become weak and we may get sick. So we take this calculated risk because it is a good risk-reward scenario.

 

We take risks such as this all the time. We do it so often that we do not even think about it in our conscious mind and it all happens on autopilot. What we have to do as traders it to make such risk-reward scenarios almost as automatic in our trading as they are in real life. We must always look at the risk-reward setup of a trade and decide if it is worth taking the risk. In real life, this is automatic, but as beginner traders, you must ingrain this into your way of thinking when trading. Trading is very much like life, and in a manner of speaking; we must not cross the road with our eyes shut!

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