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العربية
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30 November

By Ahmed Mamdouh

Category: Learn Forex

 437       72       52             

Hope is never a strategy when Trading Forex

How many of you are still employing hope as part of your trading strategy? It’s an interesting dynamic to note that, once you’ve accepted that you can no longer rely on hope, or expect the market to move in your favor, you begin to concentrate on other aspects of your trading, such as the element of risk in your trading plan. It’s at this point of personal growth that you’re probably beginning to develop the right trader mindset, in order to experience long term success.

Hope is never a plan, hope suggests emotional involvement in our trading, we can’t wish the market to go up, we can’t keep our fingers crossed that the market will maybe move in our predicted and favored direction. We have to trade with the acceptance that our trade may fail or succeed and that we have no control over what the market will do, we can only control our overall trading strategy/method and our emotions.

Difference between hope and optimism in trading Forex

It’s also important that we don’t mistake, or confuse hope with optimism; whilst many of us may trade with a healthy dose of cynicism, we have to remain optimistic. That optimism doesn’t necessarily constitute a naive belief that markets will always rise. As proficient traders, particularly trading forex, we know that we have to have a far wider field of vision than trusting on a perpetual rise in asset value. We have to be able to short and go long, this requires a far greater range of skills, observance and understanding of economic events, than simply buying an index or equities and relying on dividends and a share price rise. This range of skills, education and vision, singles out Forex Traders as unique.

Hope is a characteristic associated with novice traders, experienced traders have abandoned hope in preference to reality; they may expect certain probabilities to work in their favor, they also expect the unexpected to (often) happen, but they don’t naively hope the market will move in their favor. Having developed their plan and strategy, they now anticipate that, based on history and probabilities, the market just might move in their favor.

Experienced and successful traders eliminate the concept of hope, by replacing it with the certainties they have actual control over. They can control:

Their risk;

The securities they trade;

The markets and times they trade;

The trading plan/strategy they use to trade the markets.

These absolute certainties are the foundations on which the successful trader builds their future plan of progress.

Hope, as a trading subject, suggests we have no self-control and have failed to gain overall control over the pre-mentioned factors. Hope suggests that we’re taking a risk based on nothing other than a hunch, or at best an educated guess, rather than use all the tools at our disposal to ensure we’re providing ourselves with the best opportunity to succeed. Hope suggests that we’re dreamers rather than doers.

There’s absolutely nothing wrong with visualizing success, most of history’s greatest entrepreneurs will testify that day dreaming their ideas led them to create their truly fantastic businesses. However, as they were dreaming up their ideas and plans, they also imagined the process, in all its infinite minutiae, which they’d have to construct, in order to put their business plans together and to take the concept from imaginary to practicality. Remaining hopeful and optimistic that the plans you’ve put in place will come to fruition, is an entirely different process to keeping your fingers crossed and hoping for the best. In trading, hope never triumphs over adversity, hope never springs external, hope can never be a strategy.

 

Article sources http://www.fxacademy.com/forex-articles , http://blog.fxcc.com/category/forex-trading

Ahmed Mamdouh

Ahmed Mamdouh is the head of the English Fundamental Analysis at D1stp.com, with 9 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.