in trading as in many areas of life even if all our facts are correct, our conclusions may be completely wrong. e,g, Abraham Lincoln used to persuade juries when he was an Illinois circuit lawyer. "The story goes that Lawyer Lincoln was worried he had not convinced the jury during the closing argument of a civil case against a railroad. The jurors had gone to lunch to deliberate. Lincoln followed them and interrupted their dessert with a story about a farmer’s son gripped by panic. “Pa, Pa, the hired man and sis are in the hay now and she’s lifting up her skirt and he’s letting down his pants and they’re afixin’ to pee on the hay.” “Son, you got your facts absolutely right, but you’re drawing the wrong conclusion.” many traders trade right on the facts and wrong on the conclusions. they eventually go broke.
Great example, and I couldn’t help but chuckle a bit. This certainly happens with most traders I’d say and it’s interesting thinking about this especially when looking at big limit and market orders. If a fund sells 1000 contracts short for example most people would imagine that price should continue down. Not counting for the fact that the fund may need to get in 10,000 contracts and are simply staging in and that it may be the first set of 1000 orders. So people draw their conclusion instantly without thinking about the other scenarios that could be playing out.
Trading is a game of taking risks for achieving good rewards as a result. You can not win all the time on the Forex market but you need to win most of the times in order to make a professional impact. What is your approach in this regard?
You really don't, Gramp. In fact the exact opposite is a much better proposition: if you look at a couple of introductory trading books (such as Van K. Tharp's Trade Your Way to Financial Freedom and/or Tushar S. Chande's Beyond Technical Analysis) you'll find explanations, in detail and with examples, of why it's actually easier, most of the time, for most traders to make steady profits from methods with win-rates below 50% than it is for them to do the same with systems that "win most of the time". Trying to "win most of the time", as a retail forex trader, is typically what the 90-95% of losing traders tend to do, because they imagine (usually wrongly) that it's a sensible aim. Also, I think most forex traders are more interested in becoming steadily profitable than in "making a professional impact" (whatever that means).