‘Less think more do !’
That’s what my old Aikido instructor used to shout at me ( in broken English ) most weeks, what he meant was I was over thinking the moves, so not moving decisively and getting myself in a mess.
What he wanted to relax and just do what he trained me to do.
I often think of him when I am trading, when I mistakenly try to figure out what I think the Euro or Dollar will do next or what country is going broke next, but with forex it should be
‘Trade what you see, not what you think’
Trading what you see, versus trading what you think. Learn to trade with an open mind, without a bias as to which way you ‘think’ the market is likely to move.
Trading fundamentals of Forex are a highway to bankruptcy. There are loads of people out there that know far more about forex fundamentals that you or I how still can’t make money trading that way because Forex is just not as reactive to fundamentals as Stock markets, or bond markets.
Remember as Forex is the biggest marketplace it takes longer to change direction.
At the end of 2010, lots of experts said the Euro was supposed to be the big short going into 2011. What happen? 4 months upwards! Then at the end of last 2011,going into 2012, everyone was saying short on the euro again but it went straight up for 3 months.
What’s the important lesson here? If you are learning how to trade, take note.
Less think more do! No sorry that Aikido, the important lesson is Trade what you see not what you think!
The charts don’t lie, though some of the media may (allegedly). If the market is moving up, look to be a buyer. If the market is moving down, look to be a seller.
Trading what you think, means that you are trading your imagination, guessing where the market will move next. Doesn’t sound like most scientific (or profitable ) way to trade the market, does it ?
So what is the difference between Trading what we see, and Trading what we think?
Trading what you think, comes down to external distractions, such as current news events, gossip, which way others are trading, which country has financial problems this week, or what’s in the newspaper .
Good forex training will teach you that trading what we see, all comes down to looking at a chart, looking at the price action, and trading in the direction the market is moving. Price action will tell you more often than not, where that market is likely to move next. Trading with the trend only increases our probability of success.
Can we calculate an entry point, stop loss & target from a fundamental viewpoint? -Very difficult.
Can we calculate an entry point, stop loss & target from technical analysis ? – Absolutely.
As a result, we know that trading strong price action setups in the overall market direction will typically lead to us making money, so why on earth do we feel the need to think about the fundamentals?
Because we are human we may find ourselves over thinking the trades. It takes a lot of determination to trade against popular opinion.. Sometimes however, that’s exactly what we need to do. Remember that patience is a virtue, and there will always be another trade
As the great Warren Buffett said
‘Be Fearful When Others Are Greedy and Greedy When Others Are Fearful’
Understanding Price Action and Technical Analysis can make you money so therefore that is Trading what you see can certainly make you money