The Average Trader Is Being Set Up By The Market ~ ddfx forex trading system free download
The legendary trade Jesse Livermore once remarked very aptly that "The market is designed to fool most people most of the time." He has also been quoted in saying that "Markets never change, because human nature never changes." Although many aspects of this mans life may not be worth learning from, his perceptivities into the financial markets are timelessly invaluable to anyone who is serious about achieving success in trading.
If you have ever had some experience in investing or trading, have you ever felt that the market seems to have a way of going against you "most of the time"? For instance, if you have traded Forex before, have you ever felt that "it always goes down whenever I buy, and it always goes up whenever I sell"? Is it a matter of bad luck? Or are there some fundamental reasons why most traders lose money?
Think about it. If you do not have a highly systematic and controlled way of approaching the markets, the fact is that the markets are always rigged against you. It is not unlike going to a casino, where your chances of making money in the long term are practically zero. In the casino, all the games are rigged against us in the sense that they always have an edge over us. An "edge" is simply a statistical advantage that ensures that you will lose money if you stay long enough in the game.
So, how do some people devise strategies to take money out of the casinos? They do so by systematically eliminating the "house edge", and establishing "an edge over the house". Professional gambling syndicates win the games they play by playing only when the odds are in their favour, and knowing when to walk away without allowing the joy of winnings to get them carried away.
In very much the same way, the Forex market (and any financial markets, for that matter) is being "set up" against us. Firstly, we know that we start from a losing position from the very first moment after entering into a position. This is due to the transaction cost of entering a trade, i.e. the difference between the bid and ask price, known as spread which immediately shows up as a floating loss from the very first instance after entering a position. Psychologically, many traders are affected by the floating negative number that is displayed on the trading statement, and spend a lot of time scrutinizing the moment-by-moment increases and decreases of that number.
Our psychological reactions to market movements, and the ups and downs of the numbers in open positions, will almost certainly leads us to make counter-productive trading decisions. The interaction between human emotions and price movements naturally cause us to buy high and sell low most of the time!
What we see on price charts is essentially a graphical representation of the ebb and flow of mass market psychology, which involves millions of trading decisions at any one point in time. These trading decisions are the outcome of human nature at work in the market, involving many instinctive trading habits and attitudes.
The more we understand these and overcome the same habits and attitudes ourselves, the more we are able to eliminate the markets edge over us and stand out above the majority of traders and win successfully. Successful trading is about eliminating the markets edge over us and developing an edge over the market. It is only possible if and when you realize how the market is naturally "designed" to beat you. This involves not only understanding the market behaviour, but also understanding your own psychology as a trader.
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