It’s not about being right or wrong
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It’s not about being right or wrong, it’s about the odds. A trade signal doesn’t tell you if you will be right or wrong, it is simply a pattern that means the odds are in your favor. But you cannot start thinking you will be right or a whole host of problems will occur.
By not thinking about being right or wrong, you will eliminate the potential for the market to disappoint you. When you have a losing trade, all it means is that the majority of other traders didn’t share your belief about that market at that time. Just walk away. Don’t let being right or wrong get to you or affect your self-confidence.
If you think you are going to be right about a trade, as the market moves against you, you’re going to have a tendency that tells you you’re right and ignore the info that tells you its moving against you and that indeed you may be wrong on this one. When you need to be right, you see what you want in the market, not what’s actually happening. Don’t get blinded by needing to be right all the time. Don’t hang on to losers.
If you are susceptible to being disappointing, it will affect your perception of market information that would otherwise make you cut your losses.
The problem is, the patterns repeat themselves on a random basis. Even though the criteria are correct (a trade pattern that looks good), we still cannot predict human behavior, an important point to remember. When you put on a trade, do you know who took the other side? There’s no way to know. So, when the pattern presents itself, we don’t have ANY idea about who is going to come into the market next to influence it. So there is no point in trying to ‘figure out’ if it will work or not for that trade.
If you don’t integrate the randomness principle, you will find trading is the most frustrating endeavor you can undertake. You can only generate consistent returns by understanding that each trade is random and unique, and then taking that information and using it to control yourself after each trade. Do not get hung up on your last trade. Instead, focus on consistently trading your method over and over.
Mark Douglas