Why Trading Forex is so Difficult?
Randomness in the Markets.
Clusters of Bad and Good Luck.
David Paul, Financial Trader comments during an interview. Is it difficult to make money long term when trading currencies and indices – how do you manage? Most trend following systems have less than a 50% correct hit rate. This means that you get a series of losing trades from time-to-time – how good would you be with executing your system with precision when you get 5 losing trades in a row?
What is very interesting is that you are at the biggest risk in a winning streak.
That is why it is the worst thing to do invest more in a winning streak and to stop trading when in a losing streak.
Trading Psychology is what makes Forex trading so difficult. How you handle winning and losing and how patient you are.
Some have no problem trading the Double in a Day EA and others are broken by it. How you handle losing in very important.
Watching this video gives you a glimpse of the trading psychology and the strength of mind required to succeed.
Extract
“You can have a cluster of good luck as well. Your good luck is more detrimental to your financial health and a cluster of bad luck. In in a cluster of good luck you get a little thing between your ears called the pituitary gland and it pumps all sorts of muti into your bloodstream. You become euphoric and feel invincible. You start to forget about all those position sizing rule of only risk half a percent. You say “let’s have a big bet” when you have a run of good luck that euphoria takes over”
The trading life cycle traders have to master