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In forex trading, traders need to understand some common sense that defies human nature, which will greatly benefit their trading.
In traditional real-life situations, once people learn a skill, they typically retain it even after a long period of inactivity. For example, after learning to ride a bicycle, even after years of not riding, they can quickly regain their balance and continue riding. This is because once these skills are mastered, they form strong neural connections in the brain and are not easily lost. Similarly, common sense suggests that people will not suddenly lose the ability to use skills they frequently use.
However, in forex trading, the situation is quite different. A trader may learn a strategy, method, or skill and use it with great proficiency for a period of time, but suddenly, this strategy or skill may fail. This stands in stark contrast to the stability of traditional skills. For example, a trader may use a trading strategy based on technical indicators for a long time and consistently profit from it. However, over time, as market conditions change, such strategies may no longer be effective. This phenomenon is not uncommon in forex trading, as the market is dynamic and influenced by a variety of factors, including economic data, political events, and market sentiment. These shifts can cause a once-effective trading strategy to suddenly become ineffective.
In today's era of artificial intelligence and quantitative trading, the pace of change is even faster. Many trading tools and platforms are constantly being updated and improved, requiring traders to be open-minded, learn, and adapt to new environments. For example, you might have been using a mobile app, but suddenly, the app provider updates it, completely reshaping its interface, workflow, and functionality. In this case, you'll have to spend time learning and understanding the new interface, workflow, and functionality to continue using the app effectively. Similarly, in forex trading, traders must constantly learn and adapt to new strategies and methods, as forex market policies and guidelines may change, requiring them to not rely solely on old methods.
For example, ten years ago, negative interest rates emerged in the forex market, confusing many traders, especially those relying on long-term carry strategies. They don't know how to trade in this new market environment, as traditional carry strategies may no longer be applicable. In recent years, the forex and crude oil markets have also seen extreme events, with crude oil prices plummeting to negative levels. For example, in April 2020, crude oil prices plummeted to -$37. This event caught countless traders off guard, leading to many losing their positions and suffering heavy losses. These examples illustrate the complexity and uncertainty of forex trading and the importance of continuous learning and adapting to new circumstances.
Therefore, forex traders must understand these counterintuitive principles and learn to adapt to the ever-changing market environment. Only with an open mind, the ability to continuously learn, and a flexible mindset can traders achieve long-term success in forex trading.
In forex trading, traders should avoid easily teaching or asking friends and family to trade.
This advice isn't based on distrust of friends and family, but rather on a deep understanding of the complexities and challenges of forex trading. In traditional real-life situations, finding like-minded friends is indeed difficult, primarily due to a lack of proper methods. As the saying goes, "Don't drag friends along; find them along the way." Friends can only be selected, not taught. Find friends among those on the same path, rather than forcing them along.
For example, if you enjoy reading, find friends in the library; if you enjoy singing, find friends in karaoke bars; if you enjoy hiking, find friends while hiking. Only through action can you find like-minded friends, not through wishful thinking or waiting.
In forex trading, traders should avoid easily suggesting or encouraging friends and family to trade. First, they may not have an interest in the field, and your suggestion or guidance could be misinterpreted, or even interpreted as ulterior motives. Second, even if they are interested, without sufficient motivation and diligence, they may become dependent on you, expecting you to devote considerable time and energy to teaching them. They may frequently ask questions but fail to proactively think, which can be very frustrating. Why bother yourself?
Successful forex traders rarely teach others unless they are their own children. If your children have nothing else to do and are interested in investing, then teaching them forex trading is your responsibility and obligation. However, if they lack interest, don't force them into trading, as this will only cause you more trouble. Teaching someone uninterested and unmotivated to learn forex trading is even more tiring than trading yourself. In this case, it's better to focus on forex trading, earn more money, and then provide financial support for them. Think about it: if even your own children are like this, what about outsiders?
In forex trading, mature and successful forex traders generally don't waste their time on young so-called forex managers.
This is because forex trading is a highly complex field that requires extensive experience. Successful traders understand that building experience and skills takes time, and these young so-called forex managers, due to their youth, cannot rapidly acquire the same depth of experience, skills, knowledge, and common sense as they do.
Mature and successful forex traders typically engage in continuous learning. They enjoy reading, watching, and sharing articles, videos, and online content from other forex managers to continuously broaden their horizons and knowledge. However, they are very cautious in choosing their mentors, preferring to learn from experienced and knowledgeable professionals. These professionals often have years of experience in the market, accumulating extensive practical experience and offering valuable insights and strategies.
In contrast, while young so-called forex managers may possess some theoretical knowledge and fresh perspectives, their experience and skills are often less mature. They may lack the ability to navigate complex market environments and are unlikely to provide reliable, time-tested advice. Therefore, mature and successful forex traders aren't easily attracted by the superficial glamour of these young managers, but rather prioritize substance and the accumulation of experience.
This isn't meant to disparage young so-called forex managers; it's a sound judgment based on experience and common sense. Experienced traders understand that time is essential for accumulating experience and knowledge, something young managers often lack. Therefore, they won't waste precious time and energy on those who may not be able to provide substantial assistance. Instead, they invest their time and energy in learning and practicing areas that truly enhance their trading skills, thereby maintaining their competitive advantage.
In forex trading, traders should avoid short-term forex trading.
While short-term forex trading may appear to offer numerous opportunities, it's actually extremely risky and difficult to achieve stable profits over the long term. Many traders mistakenly believe they can quickly accumulate wealth through short-term trading, but in the end, they often just provide liquidity to the forex market and contribute to transaction costs.
Forex trading requires sophisticated technical skills, top-notch execution, and exceptional mental fortitude; all three are essential. However, most traders lack these qualities, resulting in far more opportunities for loss than for profit. Forex trading also exacerbates human weaknesses and flaws, easily trapping people in the pursuit of temporary pleasure and instant gratification, much like gambling, which can be addictive. Traders often find it difficult to hold onto their positions, trapped in a cycle of fear and greed that leads to continuous losses.
Long-term investment cycles offer fewer opportunities but are more likely to succeed. In contrast, short-term trading cycles, while seemingly more opportunities, are more likely to result in losses. I believe most traders understand this. Furthermore, traders need to clarify whether they are engaging in short-term or frequent trading. If a currency pair has only ten good opportunities to trend, and a trader seizes them, this is short-term trading. However, if a currency pair has only two good opportunities to trend, and a trader blindly trades them all, this is frequent trading.
To avoid short-term and frequent trading, traders can use a slightly longer timeframe to observe trends, at least longer than an hour. If you're currently engaged in short-term trading, there are two acceptable goals. One is to use small positions to incur losses, gaining experience through these losses and developing your forex trading system, execution, and mental fortitude. Second, if your capital is small, you may need to replenish it through short-term trading, but the ultimate goal should still be to transition to medium- and long-term trading. Otherwise, there's really no reason to engage in long-term short-term trading.
In forex trading, traders need to master appropriate strategies for entering, increasing, and exiting positions. These skills are especially crucial for long-term investments.
Strategy for long-term forex investment:
1. Position Building Phase: When a forex currency pair falls near its historical bottom, traders can begin to tentatively and slowly build long positions. It's recommended not to use leverage, or to use no more than 3-5x leverage. During this process, floating losses may occur, but traders must remain steadfast. Historical bottoms typically occur when market sentiment is extremely pessimistic. While entering the market at this time carries a higher risk, the potential returns are also substantial.
2. Scaling Phase: After the base position stabilizes, as prices rise, traders can add small positions when prices break through key resistance levels, and add smaller positions when prices retrace but do not break below support levels. Throughout this process, maintain floating profits while continuously accumulating long-term bullish positions. This strategy helps traders gradually increase their positions as the trend becomes clear while controlling risk.
3. Closing Phase: When a forex currency pair reaches near its historical top, traders can begin planning to reduce their positions until they are fully liquidated and take profits. Historical tops typically occur when market sentiment is extremely optimistic. Gradually reducing positions at this time can lock in profits and avoid losses from market reversals.
Long-term forex investment strategies for declining trends.
1. Build-up Phase: When a forex currency pair reaches near its historical top, traders can tentatively and slowly build short positions. Again, it's recommended not to use leverage, or to use no more than 3-5x leverage. During this process, you may experience floating losses, but traders must remain steadfast. Historical tops are typically times of extreme market optimism. While entering at this time carries a higher risk, the potential returns are also substantial.
2. Scaling-up Phase: Once the top position stabilizes, as the price declines, traders can add small positions when prices break through key support levels, and add smaller positions when prices retrace but fail to break through resistance levels. Throughout this process, traders should maintain floating profits while continuously accumulating long-term declining positions. This strategy allows traders to gradually increase their positions when a trend is clear, while also controlling risk.
3. Closing Phase: When a forex currency pair reaches near its historical bottom, traders can begin planning to reduce their positions until they are completely liquidated and take profits. Historical bottoms are typically times of extreme pessimism. Gradually reducing positions at these times can help lock in profits and avoid losses from market reversals.
13711580480@139.com
+86 137 1158 0480
+86 137 1158 0480
+86 137 1158 0480
z.x.n@139.com
Mr. Z-X-N
China · Guangzhou