When I first started dabbling in forex, the singular assumption to make money in the game of forex was a simple one: Be right.
If you have that assumption, dump it.
I play games. Computer games, sports mainly.
In games, the goal is to win. To beat as many enemies as you can. Beat more than your opponent. Score more than the opposing team. Follow the strategy.
If you watch soccer, you’d know that it’s entertaining simply because there’s no “sure win”. Through luck, a goal can be scored. An injury can happen. Bad umpiring.
Computer games, you can lose (or cheat) when there’s a bug to exploit.
Same with trading.
I beat the forex market be reflecting on my edge. By changing my perspective on what exactly is “winning”.
And here I am telling you, to beat the forex market, which consists of small time retailers and big banks, central banks, and cheaters, you’re set up to lose.
That’s the first thing you need to realize: You are set up to lose.
Embrace that fact. And find out why. What are the exploits others are using against you? Who are your opponents?
You don’t know, don’t you?
Acknowledge what you don’t know.
And sharpen your own edge. Your own personal edge that no one knows except you.
When I play a computer game, I want to win, of course.
And pro gamers don’t just “git good”. Yes. Skill is important. But so is patience, deep understanding of their own weaknesses, as well as their opponents’.
Without knowing your opponents in the forex market, and acknowledging you are set up to lose, you need to change the rules your way.
You’re not going to beat the winners if you don’t know what the game is. You’re not going to beat the winners if you don’t know what you don’t know.
You’re not going to “win”, if your idea of winning is making money.
Winning in forex is about sharpening your edge, knowing your own personality, and thinking deeply what the other side of the trade has against you.
Being on the defensive is an option. Trade small. And through many, many trades, start to get a feel of how market action works.
Know what edge the others have against you. Speed of execution. Stop runs. Information you don’t have.
Just like computer games, I aim to win by understanding how the game is designed. For example, if there’s a mechanic in the game to cook materials or build materials, you simply must know it’s there for a reason. Use it. Don’t say “I’m gonna just ignore it.”
If there’s a way to reduce electrical damage, find out how to, because there’s a reason why the mechanic is there. Because clearly if you don’t make use of the mechanic, you will lose to enemies who attack with electricity.
So what are the mechanics in the forex market available that you can utilize to sharpen your edge?
Here’s a handful.
- You can control lot size. Use it. Brokers want you to maximize your margin. Don’t do it. It’s like going in without “margin calls”, which can kill you.
- You can trade 24/5. At different timeframes. Brokers want you to trade quickly, trade more, so they earn commisions and from spreads. So don’t. Trade larger timeframes that are comfortable for you.
- News are sentasionalized to stir emotions in you to trade. Recognize it. Ignore it. Read the fine print and realize the ambiguous language analysts use that don’t tell you anything. Don’t trade on emotions. This is a powerful edge you can develop.
- There are only few important instruments that matter. The rest are just “made up”, tempting you to make more trades. But don’t forget co-relation and exposure. You’re just being dragged to think the more things to trade, the higher chances you can “hit the jackpot”. No. Focus on the very few that matter. Ignore the rest.
- Losing is part of any system or strategy. Remember you are set up to lose. But there are strategies that include “losing” as part of a long term winning strategy. So stop thinking beating the forex market is about winning every trade you take. And when you lose, jump to the next strategy. No.
There are many more. Just like computer game design, understand how the game is designed, and reflect on how to achieve “winning” in an efficient manner.
Know what you don’t know. Know what you don’t have. Know what edge you can never have against those who have privileged access to.
And finally, realize the market does not give you what you want from it.
Instead, take what it offers. And be happy with it.