The Secret to Long-Term Forex Trading Success - Blackswan Fx
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The Secret to Long-Term Forex Trading Success

In today’s post, we’ll challenge you to ask yourself, “How much do I truly desire to become a successful trader?” Are you willing to make significant changes in your approach, even if it means challenging your ego and overcoming laziness? Changing your thinking is the first step to putting an end to old habits that damage your account and setting yourself on the path to trading success. This post will explain why and how you need to shift your mindset, and if you fully commit to it, you will see a substantial improvement in your trading performance.

You need to change how you THINK about trading

Traders often struggle with becoming too attached to a specific trade. However, it is important to have no emotional or mental connection to any individual trade. As discussed in the article about randomly distributed winners and losers, a 75% winning percentage indicates that over a large sample size of trades, you can expect to win approximately 75% of the time. It does not mean that any one trade has a 75% chance of being a winner, and many traders mistakenly believe that a specific trade will be a winner or has a 75% chance of winning, which is not accurate.

To look at this in a different way, let’s consider a jar filled with marbles of different colors, say green and yellow. Imagine that each marble represents a trade you’ve taken, and there are 150 marbles in the jar, 75 green and 75 yellow. The green marbles represent losing trades, while the yellow ones represent winning trades. So, you have a 50-50 split of winners and losers, which means you can expect to win around 50% of your trades.However, it’s important to keep in mind that the marbles are randomly mixed inside the jar. When you reach in blindly to grab one, you have no idea whether it’s going to be a green or yellow marble. So, you can’t expect to pick out a yellow marble every time because the distribution is random.

So, to induce the proper trading mindset, you must view your trades as randomly distributed events, regardless of your expected win rate. This perspective will help you avoid emotional and financial attachment to any individual trade. Instead, focus on a series of trades that have the potential to generate profits. Avoid becoming overly excited about any particular trade setup, as each setup has a random outcome. By removing expectation and attachment, you can properly manage risk and allow your edge (price action) to play out over a series of trades.

To avoid emotional pain, think in terms of probability

In a slot machine, you don’t expect to win or lose since it’s a random event. But in trading, you may expect a pattern to work just because it worked before, leading to disappointment since each trade’s outcome is random and not connected to the previous one.

Although effective trading strategies like my price action strategies can increase the chances of success in trading over a slot machine, each individual trade’s outcome is still random, and it’s crucial not to let the result of one trade impact future trades. It’s essential to remember that a trading edge’s success rate is determined over a series of trades, which may include losing streaks. Avoid being affected by market fluctuations by adopting a probability-based mindset, just like picking marbles blindly from a jar, and recognize that trading is not about being right or wrong. By doing so, you can put yourself in a position to profit from the market instead of being negatively impacted by it.

How to Avoid Trading Mistakes and Start Making profits

To avoid a snowball effect of trading mistakes that can lead to a blown-out trading account, it is important to change your mindset and think about your trades in terms of probabilities. Emotional trauma and frustration can be caused by becoming too attached to a trade and expecting it to be a winner. By thinking in terms of probabilities, you can avoid this expectation and not care if you win or lose on any one trade. When demo trading, you likely did well because you had no real expectation, and the same mindset can be applied to live trading. By doing this, you can increase your chances of making consistent money in the markets.

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