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LESSON: Why learning More About the Markets Won’t Fix Your Problem

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[op_liveeditor_element data-style=””][text_block style=”style_1.png” align=”left” font_size=”16″ font_font=”Montserrat” font_color=”%237e7e7e”]An extremely common mistake by traders when they lose a trade is to assess the markets as to why their trade was a loser. They go back and look at previous examples until they come up with some reason as to why that was a bad trade.

The problem is the cycle this starts, and the thinking pattern this then creates. When a trader starts their trading journey they normally start with a demo account. With very little training or knowledge about the markets the trader will place a few trades. Some of these trades will go onto be nice winners. The trader will then think that trading is the easiest thing in the world and if that if they can only increase their knowledge of the markets they will be able to clean up and make a killing.

Whilst every trader must have a method and a thorough understanding of market structures, there comes a point at which more learning about the markets actually becomes counterproductive.

When the trader who has a solid trading method and knowledge of market structures takes a loss they will still be in the thought process of more knowledge is the way to more profits. This trader will go on the hunt for more education and more information.

So whilst the trader goes on learning more and more information it begins to cause problems. This same trader will then begin to start hesitating when placing and managing trades. They have too much information and cannot make a decision. The trader has fallen into “Analysis Paralysis”.

What the trader is failing to recognise the whole time is, that they will never know fully about the markets. As I said earlier, the markets are made up of other people trading the price up or down. It could be said that each individual trader is a separate market variable themselves. For a trader to know and learn everything about the markets they must know every trader and every trade and the quantity they are in! Obviously this is impossible.

A+ Trades

We never know what trades will be our winning trades and which trades will be our losers. No matter how great a setup may look it can still do absolutely anything. Next time you place a trade, that is an A+ trade and you take a loss, do not dwell on it, and go on a search as to why it didn’t work out. Move on to the next trade and don’t hesitate pulling the trigger given the same looking A+ trade the next time around.

This is the Major Takeaway!!

This is what you need to take away;

When you lose; you do not need to go back over the trade,  and you do not need to go hunting for reasons as to why.

 

You also do not need to try and find some obscure news report to justify your loss!

You placed the trade because you thought it was a high probability trade and that is enough. If you have a 60% win rate, then 40 out 100 trades are going to lose. That is a lot of losses!

When you get to this point, trying to fix things with more and more education is not the answer because you have a base trading strategy edge in place.[/text_block][/op_liveeditor_element]