One of the most amazing things I have discovered is that most amateur Forex traders believe that the results of the Forex market are not random, yet they cannot seem to produce consistent profits. Shouldn’t a non-random market produce consistent results and a random market produce inconsistent results?
What those new Forex traders don’t understand is; Events with probable outcomes can produce consistent results. Experienced traders treat trading as a numbers game, which is similar to how casinos and professional gamblers approach gambling.
To give you an example, let’s take a look at the game of poker. In poker, the casinos have approximately a 4.5% advantage over the player. This means that, over a large sample size, casinos will generate a net profit of $0.45 for every dollar wagered on the game.
4.5% might not sound like a lot, but let’s assume a total of $100 million is collectively wagered at the casino over the course of a year. The casino will make a net profit of 4.5 million!
All professional Forex traders understand that each individual trade is unique, where the outcome is random relative to the last trade or the next trade. New Forex traders should know that in each individual trade, there will be a random and unpredictable distribution between winning and losing. But on a collective basis quite the opposite is true. If a large number of transactions are executed, patterns will emerge that will produce a consistent, predictable, and reliable result.
Now, let’s delve into the psychology of how new Forex traders can succeed in producing consistent results by applying the following simple beliefs. First, they need to know that 2 levels of aligned beliefs are required to produce consistent results in a random situation.
At the first level, they must believe in the uncertainty and unpredictability of the outcome of each individual trade. At the next level, they must believe that the outcome of a series of executed operations is relatively safe and predictable. The degree of certainty is a function of how good your lead is.
It is the ability to believe in the unpredictability of the currency market and at the same time believe in the certainty of the outcome when executing a series of trades that makes an individual Forex trader successful.
The belief in the uniqueness of each trade prevents experienced traders from the wasted effort of trying to predict the outcome of each individual trade. Experienced traders have learned and fully understand the fact that they don’t know what will happen next. The most important thing is that they do not need to know to make money constantly.
When you don’t have to know what will happen next in Forex trading, you don’t put special emotions into every trade. In other words, their involved egos won’t get in the way of you operating effectively.