Stop Trading And Do This Now

Like war and making movies, trading is basically 99% boredom and 1% action.

That’s what makes it so dangerous.

We all know that we need to eat our vegetables. Drink eight water glasses per day and exercise regularly.

Blah. Blah Blah.

How many of us actually do even 50% of what we are supposed to? Life is not like Lake Wobegon where all the women are strong, all the men are handsome and all the children are above average. In real life we are all full of character flaws and the key to success isn’t to correct them through willpower but to intelligently manage them with minimum damage.

Which of course brings me to trading.

We are not perfect Platonic beings. We can’t sit perfectly still waiting for our setup to occur while prices flash in front of our eyes. We are day traders. We like to get involved.

But of course that is always the start of every sad story in FX. I got bored. I took a trade. And before I knew it…

Basically there are two ways for the market to rattle you. One, it can shake you out of good trades by moving prices against you, make you doubt your set up and then make you cover at breakeven and then turning to hit your profit target. This happens to me all the time and while it’s bad it is by no means catastrophic. The net result is that you spend a lot of time treading water instead of making profits, but eventually if you follow your setups you will swim even if it’s with all the grace of a frog.

The other way for the market to con you is far more insidious. It is essentially the financial market version of the three-card monty. In that game the mark (who is always you) is attracted to the game by the smooth-talking dealer who flashes the card deck and shows you how “easy” it is to find “the lady” ie the queen of hearts. In FX it generally looks like this: Prices are rallying! It’s a strong move! I am jumping in! Wait — it’s correcting? I am not gonna lose. I am adding more, this move will resume for sure!