There are two inevitable facts in forex trading, but unfortunately not many are aware of these two facts. And if you really remember these two things then you will have the psychological ability to cope with post-loss turmoil.
What are those two things? This is it:
- Unforeseen Things Can Happen Anytime
This is the fact. Just face it. No matter how much effort you make in analyzing, no matter how sophisticated the analysis technique you use, you can’t be absolutely certain that percent of the market will move exactly the way you want it to. Admit it.
The market always finds ways to surprise you, in both positive and negative ways. OK, we will not discuss the positive surprises because everyone would be happy to get a positive surprise from the market. What we’re talking about is a surprise in the form of a movement that goes against your will, perhaps behind the intervention of the central bank, or perhaps one of the central bank’s governors either because of what winds are issuing dovish statements. Who knows?
For example, do you remember the incident in January 2015, when the Swiss National Bank gave a “shock” to the market by removing the benchmark Swiss franc exchange rate against the euro? Not to mention if we talk about natural disasters, or if North Korea suddenly launches nuclear missiles toward the United States. Kim Jong Un is unlikely to hold a press conference before attacking his enemy right?
Unexpected things like this can lead to market turmoil and very, very unlikely you will know it will happen even if you are very detailed in paying attention to charts, economic calendars and news monitoring at any time.
- Trading is The Real Form of Opportunity Theory
There are two important things in “play” theory of opportunities in forex trading:
First, you have to “make sure” that the position you are going to take is in line with the ongoing trend.
Secondly, you should realize that there is still a possibility that prices will move against your position, although based on research opportunities that the position you take will result in a profit – say – by 70%. That is, there is a 30% chance that your position will end in a loss. That is why risk restrictions are needed.