One of the most amazing things I have found out is that, most amateur Forex traders believe that the results of the Forex market is not random, yet they can not seem to produce consistent profits. Should not a nonrandom market produce consistent results and a random market produce inconsistent results?
What those new Forex traders fail to understand is; Events with probable outputs can produce consistent results. Experience traders treat trading like a numbers game, which is similar to the way casinos and professional gamblers approach gambling.
To give you an example, let's take a look at the game of poker. In poker, the casinos have approximately 4.5% edge over the player. This means that, over a large sample size, the casinos will generate net profits of $ 0.45 on every dollar wagered on the game.
You may find that 4.5% may not sound like a lot, but if suppose a total of $ 100million dollars is wagered collectively in the casino over the course of a year. The casino will net 4.5million profit!
Every professional Forex traders understand that every individual trade is a unique even, where the income is random relative to the last trade or the next trade. New Forex traders must know that in each individual trade, there will be a random, unpredictable distribution between winning and losing. But on a collective basis just the opposite is true. If a large number of trades are executed, patterns will emerge that produce a consistent, predictable, and reliable exit.
Now, let us get into deeper psychology into how new Forex traders can succeed in producing consistent results by applying the following simple beliefs. Firstly, they need to know that it requires 2 levels of beliefs to be aligned in order to produce consistent results in a random situation.
At the first level, they must believe in the uncertainty and unpredictability of the outcome of each individual trade. On the next level, they must believe that the income over a series of trades executed is reliably certain and predictable. The degree of certainty is a function of how good their edge is.
It is the ability to believe in the unpredictability of the Forex market and simultaneously believe in the certainty of the income when a series of trades are executed that makes an individual Forex trader successful.
The belief in the uniqueness of each trade advances experience traders from engaging in the pointless endeavor of trying to predict the outcome of each individual trade. Experience traders have learned and completely understand the fact that they do not know what is going to happen next. Most importantly, they do not need to know in order to make money consistently.
When you do not have to know what's going to happen next in Forex trading, you do not place and special impressions on each trades. In other words, your egos involved will not get in your way of trading effectively.