Unpredictability, A Big Disadvantage!

Discussion in 'General Trading Discussion' started by TraderAnalyst, Oct 7, 2019.

  1. TraderAnalyst

    TraderAnalyst Senior Investor

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    One of the big factors of forex trading that is very scary is unpredictability. There are many currencies up for trading and the economic political conditions of the countries to which they belong play a big role in Forex trading and one does not know which way the market would swing . Any currency can switch any time so this is a big disadvantage.
     
  2. J_C_Anderson

    J_C_Anderson Senior Investor

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    Actually, all trading process is built on dealing with probabilities and unpredictability. Trading is one of those spheres of activity where there are no certain actions leading to the guaranteed results. That is why each trader have to understand that it is impossible to win in 100% of the trades, but it is important to earn more when you win than you lose when you make mistakes to be profitable. In fact, the result of one trade means nothing while the results of the month or a week are important.
    Trader has to deal with numerous factors impacting the price movement. It is almost impossible to take into account all of them, especially if you are not a financial professional. In this case, it would be better to rely mostly on price action showing you how other traders react on the particular event. In otherwords, you do not need to make prediction - it would be better to wait for the movement and then join it. For example, you can get into the position using small pullbacks that occur from time to time during the whole period of trend movement. At the same time, you also need to be able to distinguish whether it is a pullback or a reversal, and sometimes it is the most complicated task for the trader, but if you will be able to do it successfully, you will become profitable.
     
  3. longtermbull

    longtermbull Administrator Staff Member

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    I think what you are trying to say is that the trend is your friend?
     
  4. J_C_Anderson

    J_C_Anderson Senior Investor

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    Yes, absolutely. It is better to open a position in the direction of the main trend and hold it long enough to make substantial profit rather than try to benefit from short movements. In this case, your chances to succeed would be higher, and also you will have to pay less commissions (since you are making less trades), that is important too. By the way, there were several researches conducted by large financial institutions confirming that less turnover and longer holding periods are better for most of the investors,and this idea has been confirmed with statistical data.
     

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