FX TRADING PSYCHOLOGY
the markets or learn from their own mistakes.
Conscious Incompetence
Eventually a trader will begin to realize that
being
successful isn’t as easy as they once thought. Buying
and
selling at will won’t get the job done and
the
quest to acquire k n o w l e d g e begins. (It was at this stage when I first came across FX
Trader
Magazine as I was scavenging the
internet
for as much information as I could find).
C o n s c i o u s Competence
After finding a strategy, back testing said strategy and creating a solid trading plan, the trader now feels as if they have done everything possible to put themselves in a position to succeed. However, as their live trading begins they still notice a few minor setbacks standing in their way of consistent
60 FX TRADER MAGAZINE April - June 2016
The key to making a change is accepting responsibility and taking action to deal with it
becomes difficult and others will find themselves stuck, one step away from the prize in an endless cycle between the conscious incompetence and conscious competence stages. Being stuck in this cycle is very stressful and consumes a lot of mental energy. The trader feels as if they’ve done everything to deserve success yet every two steps forward are
profitability.
The fourth stage isn’t too important because 90% of traders never make it past the third. Many will quit when trading
followed by three in the opposite direction. “Why” is the main question that is often asked, and when no answer is available blame is thrown at the market, the broker and of course the trading strategy. This leads the trader to head back
to the
drawing board, searching for a new method for extracting profits from the market, starting the cycle over once again.
There’s an
endless number of profitable strategies that exists and if your strategy made it past initial
back testing and demo
testing, trading
phases, then I’m sorry to say but,
it’s not the system that’s all of a sudden failing…It’s you. Believe it or not, most traders don’t have a problem finding winning trades. In 2011 a study was performed by David Rodriguez and Timothy Shea which looked at two years of data and over 12 million real trades from FXCM clients worldwide. The study showed that on average, traders were correct more than
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