Making Mistakes

When trading in the ForEx market it is best to come to grips with the cold hard fact that only 5% of all traders achieve their ultimate goal of being consistent with their profits. The difference between that 5% and everyone else is that they learn from their mistakes and recognize them as learning experiences, not personal failures to be ignored and swept under the rug.

The majority of investors view a trading mistake in terms of the outcome of a given trade. The reality is that mistakes are the results of certain guidelines not being followed or when an investor violates his own rules.

For example: a signal is taken and the trade turns out to be a loosing trade. Many people would view this as a "mistake". But in reality it is virtually impossible to win every single trade. Even having lost the trade, the trader is proud for having followed the system and has gained self confidence. There is no mistake here - just a fact of life.

Here is another example: a signal is not taken and the trade turns out to be a profitable one. This is a true mistake because the trader did not act on a trade when his system signaled it, resulting in frustration and a loss in confidence.

Here is perhaps the most dangerous mistake a trader can make, which is even more dangerous than it looks, because on the surface the trader seems to have not made a mistake. For example: a signal was not taken and the trade turned out to be a loser. While the trader did not loose any money, this sets the trader up to second guess his own system on every trade. What starts out as confidence in the system turns into overconfidence regarding one's own abilities, which will eventually lead the trader into ruin.

Remember: In order to avoid most trading mistakes a trader only has to do the following:
1.Have a trading plan, which includes your system, money management and risk management parameters.
2.Have the discipline to strictly follow your trading plan.