Forex Trading - Instinct Or Algorithm?

What is the most important thing in trading - instinct of a trader or algorithm of a trading system? The financial profitability is the criterion that measures the success of a trader and algorithm of trading robot.

Hunting in the market.

There is an opinion saying there is no correlation between trader's knowledge and his results of trading. They think that absence of knowledge in math, technical analysis and market does not prevent him from succeeding in trading. Trader is considered to be as a hunter in market. He uses only one tool available in hunting his instinct. They think that only the instinct can help in predicting the market movements.

The only thing we need is to find out how efficient is this instinct of a hunter is in market. We need some kind of coefficient of efficiency to do that. It is hard to do it with high precision but we can find approximate answers. Based on data form IG Index, plc we can confidently say that 95% of "hunters" fail in Forex market and only 5% of them succeed. Therefore this coefficient of efficiency of the instinct is only 5%. Even a century old steam machine could do better.

What are the obstacles for successful trading?

There are two things that prevent a trader to trade efficiently. The first one is a continuous desire to use his "hunter's instinct". The second one is trying to predict the future of the market.

Inexperienced traders always try to substitute the experience with instinct. The root cause for it is greed that makes them feel unsatisfied with the profit they have. Instead of systematic market study trader relies on his individual feeling about the market. Imagining himself as an invincible hunter a trader gets his adrenaline dose and becomes overconfident about market behavior. The final result is that market will teach him a lesson by taking away his money.

It is impossible to predict price movement in market. This statement is the source of many arguments. Many people argue that they can predict the probabilities of price reaching a certain level. But it is impossible to predict the price accurately. From probability theory that means that probability of price reaching a certain level is 100%. But usually no one can predict with accuracy of 100%

The only alternative to hunter's instinct and predicting the price is carefully developed trading system. A trading system can eliminate second-guessing, predicting and relaying on instinct from the trading. A trading system gives you exact points of entry and exits. It works very efficiently from financial standpoint.

Forex Trading - 20 Rules For Success

So many people fail in trading Forex. But you don't have to. Some people ask me if there any rules to become a successful trader. When I think about my trading I clearly see 20 rules that if followed can make you consistently profitable trader. Some of them you probably know. The only thing is left is to implement them in your trading.

1. Plan your trades and trade your plan.

2. Fear and hope are the two worst enemies for trader. Learn to control them

3. Always keep the records of the results for your trading.

4. Keep the positive attitude regardless of the results of your trading.

5. Don't think about Forex market when you are not trading.

6. Stop-loss is the key to your success in trading. Always cut your losses.

7. Successful traders always devote their time to study the market.

8. Successful trader always sets his profit limit in each trade.

9. Do not collect opinions from people before entering the market. Facts are priceless. Opinions are worthless.

10. Never exit your position because of impatience. Never enter the market because you tired of waiting for the right signal.

11. Do not move your stop losses during the trade.

12. The most powerful tool in your trading is a simple trend following.

13. The hardest part in trading is not predicting the market movement but control of your emotions and discipline. Successful trading is a hard work and can be disappointing. You are the most important element in your success.

14. Develop discipline by following your plan of trading.

15. Expect and appreciative your losses. One who focuses on losses too much usually misses the next profitable opportunity.

16. Applying constant effort is the only necessary component of succeeding in Forex trading.

17. If you don't progress in Forex you will slip back. As soon as you reached your goal set another a higher one.

18. The power of concentration will make you a great trader. In other words split your time between studying the market, developing your trading plan, analyzing your past trades and actually executing the trades.

19. Divide your profit in two parts and never risk more that 50% of your profit in the next trade. That will help you to grow your account.

20. The most successful traders do not do what they wish to do in trading. They have trained themselves to choose between two kinds of freedom: freedom of doing whatever they wish to do and freedom of doing what they must do in order to be profitable.