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Sunday, 10 June 2018

Why Forex Traders Knowingly Take Bad Entry And Exit

Why Forex Traders Knowingly Take Bad Entry And Exit, Bad Entry, Bad Exit, Forex Traders, Forex Blog, Forex Friend Loan, Trading Tips, Forex

Why Forex Traders Knowingly Take Bad Entry And Exit


Why and How forex traders knowingly take bad entry and exit? Learn from this forex blog from forex friend loan why forex traders knowingly take bad entry and exit trade. We are forex traders and we all make mistakes time to time, but in trading, it often happens that traders will intentionally take wrong entry and exits that cause trades to go bad. I myself am not a psychologist, but I'm willing to share my experience in this forex blog post.

Now we're not talking about losses that are the result of testing out a trading strategy or a particular combination of indicators. Nor are we talking about simple errors committed purely by accident. If profit is our objective, then why would we do these things that are totally out of alignment with our better judgment? This phenomenon has many very unpleasant results that are experienced quite regularly in the trading world.

A person's self-esteem can take a major beating when these intentional bad entry and exit mistakes occur along with losing money. Additionally, traders will then engage in a lot of putting oneself down for having made the mistakes.

Depending on the size of the loss, this can be the start of a rather nasty cycle that compounds the problem and sets the stage for it to happen again. Until the root cause of the problem is discovered and the trader takes action to address it, the self-sabotaging behavior is likely to happen again and again.

"THE SINGLE BIGGEST PROBLEM IN TRADING RESULT, 
UNTIL THE ROOT CAUSE OF THE PROBLEM, IS DISCOVERED"  

Experienced traders can encounter this as well. For an example, one such trader (we'll call X) with over 50 years experience had been going through this month-after-month for over a decade since he started trading. Mr. X has done just about everything in the futures industry that there is to do. He spent time on soybean farms and at the shipping docks loading ships and coordinating shipments and orders. For about another decade, Mr. X was on the floor of the exchange running orders. From there, he worked both for and as an introducing broker in the commodities industry until he decided to retire at the age of 59.

Needless to say, Mr. X had plenty of experience in trading, but for nearly 15 years, Mr. X has been losing money. But why, and why does he continue? Trading is definitely nothing new to Mr. X. As a broker, he was very successful. He understands just about every strategy and system there is.  He's pretty sharp and knows what he's doing on the computer and how to read the charts. Mr. X loves trading and looks forward to getting up every morning to get busy with his trading. On a typical day, he might make $600 or lose $800. Most often times he loses.

When his wife gets home from work (yes, she still works at the age of 70), he's usually brooding in his easy chair after kicking himself and calling himself "stupid" or "idiot". In all these years, he still has yet to end a year in the black. He's also concerned about how much longer his wife is going to let him keep on this way.

In response to the question why he sticks with his current method, and why he doesn't make use of a system that he knows is profitable, he simply says that he doesn't because they are boring.

This is a simple fact: a well-thought-out trade, where you know what you'll do before you get in regardless of which way the market moves can be very boring. However... when you enter trades without a plan, or if you've done something outside your rules, the suspense can be very powerful.

Why do people take the time to read entire books instead of going straight to the end to see if the hero triumphs or fails?  Why do millions of people watch football games, rather than simply check the scores in the morning?

WHY FOREX TRADERS KNOWINGLY TAKE BAD ENTRY AND EXIT

It is the suspense, the excitement of not knowing the outcome, that brings the thrill. The moments that are most enjoyed and fully hold our attention are when the ball is in the air and hasn't been caught yet when the hero's fate is uncertain. In being human, there is a part in all of us that craves that excitement. At the conscious level, making money is what everyone desires (who doesn't?). Many people choose to trade because trading offers the potential for very significant monetary rewards.

The real risk is that it also offers the thrill that a certain part of us craves at the subconscious level.  If that part of you isn't being fulfilled through other channels of your life, it is likely to find its way into your forex trading and seek satisfaction there. Excitement from not-knowing the outcome in your forex trading is where you don't want it. What you need to do is to include activities in your life that tend to this very human desire, and let your trading be a little boring - but making money.


How To Avoid Forex Traders Knowingly Take Bad Entry And Exit Trading Tips


When you manage a forex trade, you are constantly taking decisions—often under pressure. How do you make the best possible decisions on entry and exit, knowing they will have an impact on your trading results?

There are strategies you can use to avoid common pitfalls and hone your decision-making skills. Making better, faster decisions will help you take advantage of trading opportunities and avoid pitfalls. Here are bad entry and exit trading tips.

1. Reframe The Problem
Backing up is sometimes the best way to move forward. When you are presented with a bad entry and exit problem, step back and think about its full context. Try to see the issue from as many perspectives as possible. That will help ensure you are not emphasizing one aspect and neglecting other bad entry and exit.

2. Take Evidence-Based Decisions
The aim of evidence-based management (EBM) is to use scientific evidence when you take entry and exit decisions, rather than simply trusting one's instincts. Like most traders, you probably tend to use your judgment and to base your decisions on what is familiar. But experiences that you have had at trading or in different circumstances may not apply to the situation at hand.

There are simple steps you can take to incorporate evidence into your decision making.
  • Use performance data to support your decisions. Get the most current and complete data possible.
  • Challenge your gut feelings. Is there any objective evidence to support them?
  • When a course of action is suggested, find out what it's based on and whether it's supported by data.
  • Determine whether commonly used trading strategies have worked in a situation like yours. Will they apply to your particular case?
  • Check that the business data you come across are current and objective.
3. Challenge The Status Quo
People tend to choose the status quo over change, to stay in their comfort zone. But being comfortable with an approach may not be enough to justify it. The question whether you would choose a course of action if you weren't already following it. Examine your options as realistically as possible. Don't overstate the cost or the effort involved in making a change.

For example, if you were starting over, would you use the same trading strategy tactics to take entry and exit? Would you attend the same trade shows?  Would you emphasize trading strategy, trading style or a mix? Don't forget to find supporting data that will help you review your choices objectively.

4. Get An Outside Perspective But Trust Yourself
Make it a habit to ask a trading mentor for information and opinions. Be open-minded. Get a wide range of views so you can see an issue from as many perspectives as possible.

5. Develop An Eye For Risk
It's possible to train yourself to look for all types of risks. Whenever you take a decision, ask yourself:  If I make the wrong decision, how will I know it?

For example, if you are considering changing your entry to cut losses, think about how you would determine that you'd made the wrong decision.

Even a generally good plan will have costs and potential problems. How the plan could go wrong. Examine all the evidence, both bad and good.

6. Let Go Of Past Mistakes
People have a tendency to make choices that justify past experiences, even when a previous decision has not worked out as well as they'd planned. We also tend to spend time and money fixing past problems, when it would be more useful to acknowledge the mistake and move on.

Making sound decisions means taking into account the evidence that is available at the time. Sometimes the context changes and that decision is no longer valid.  Recognize that you made the best decision possible under the circumstances, and then review the situation to see whether a different decision is now called for.

In your trading, take time to recognize what make good decisions based on market evidence.

7. Be Honest With Yourself
Before gathering takes entry and exit evidence to make a decision, take time to review your own motivations.  Is your mind already made up?  Are you really gathering evidence objectively, or are you simply looking to confirm an existing idea?

Being aware of your own motivations can help you remain objective and focus on finding the best possible solution for your trading.

The Bottom Line
Taking the decision to trade entry and exit is an extremely hard, and as you can see, there are many ways to use it. There are basic guidelines that can be used to assess market strength or weakness, as well as to check if the market is confirming a price move or signaling a reversal. Indicators can be used to help in the decision process. In short, indicators is a not a precise entry and exit tool – however, with the help of indicators, entry and exit signals can be created by looking at price action.