Psychology of Forex Trading - page 5

 
Forex Psychology: learn from your winning trades what you did right and why they was winning
 
Forex Psychology: If you missed good chance of trade wait for PULLBACK signal and enter the race
 
Forex Psychology: Keep your trading simple with naked chart
 
Mohammed Mounir:
Forex Psychology: Keep your trading simple with naked chart
naked chart is for people with at least 10+ years experience in trading Forex. I've been studying Forex since 2004.
 
Cuong Truong:
naked chart is for people with at least 10+ years experience in trading Forex. I've been studying Forex since 2004.
Professional traders works on clean charts with price action signals
 
Forex Psychology: Trades needs time to make profits
 
Forex Psychology: Learn how to trade first and stop worrying to make money fast
 
Forex Psychology: The market is not your enemy, it doesn't care whether you make money or not
 
Forex Psychology: Set your STOP LOSS properly to a certain price level depend on your Trading plan

Forex Psychology: Trust yourself and trust your trading strategy as Forex trading needs big decisions in most situations

Forex Psychology: Support & Resistant levels are important for entry and stop your positions

Forex Psychology: If you wish to go far in your trading, get ready to accept some losses positions and try hard to focus on good signals to trade

Forex Psychology: you don't need to RISK too much to make more money
 

Hello,

I think that there is a serious misunderstanding in that analysis. A "goodness" of a trader cannot be measured from the profit trades percentage.

i think that the sentence "traders make money most of the time as over 50% of trades are closed out at a gain", or

"In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time"

all are meaningless.

The fact that a trader shows a trading history in which, for example, 70% of the orders closed in profit says nothing about if he/she is a good trader or not.

As an example, if you traded without stop-loss (or with a huge stop-loss) for a while, you could have a (even long) series of trades all in profit, i.e. you would probably have 100% of profit trades for a long time, even if you traded absolutely "at random" (as happens in many grid-base strategies...).

That doesn't mean that you are a good trader!

That is just a (statistical) consequence of the fact that the ratio SL/(SL+TP) is practically 1 (i.e. 100%).

I mean that, apart from your trading strategy, the profit trades percentage does depend on take-profit and stop-loss levels.

So, the only way to distinguish between a good and a bad trader is from his/her long-term results.

Where "long-term" means N=100 trades or 1,000 trades or 10,000 trades, depending on the stop-loss and take-profit levels that trader adopted. This number could be roughly estimated as N = 10*(SL+TP)/TP. 

For example, in the crazy no-stop-loss strategy I mentioned, maybe we have to wait 500-1,000 trades before seeing the complete account catastrophe; up to that time the profit trades were 100%.

Therefore, the evidence that "most traders close trades out at a profit over 50% of the time" just means that most of traders are used to set a stop-loss larger than the take-profit, and nothing more.