He Understands the Rules and What He’s Playing!
Contrary to the name of Kenny Rogers Ballard ‘The Gambler’ everything about the way he was told to play cards was structured and had specific rules to follow. A similar framework of rules you need to apply with your trading when you trade forex.
The major difference between trading and gambling is, of course, as a trader we get to choose the ‘hand’ we want, we aren’t randomly dealt a hand. So, with that in our favor how hard can it be? Well as hard as you want to make it!
Your Stubbornness Will Cause You Grief
We used to sing ‘The Gambler’ all the time on the Bank trading floor especially when a trader on the team had a big position which we all knew was wrong. It was destined for failure and the only reason why they wouldn’t close out the position was pride and stubbornness.
I get it, no one wants to be wrong. But sometimes you are and as a trader, you have to understand, you are going to be wrong a lot. Recognizing when you’re wrong will save you a huge amount of money and that’s a skill that bankers spend years finessing. When you’re wrong, close the position immediately without hesitation!
This is where knowledge and education intersect. If you don’t know how the market & fundamentals work, then how do you know when you’re wrong? The likelihood is you have no idea what’s happening anyway except for the fact that your losing money, so how can you ever be successful or improve your position management skills if you don’t know what’s happening?
Recognizing when you’re wrong is a skill that only comes with experience and that’s why you rarely see Professional traders running positions very far. As Kenny some eloquently put it:
You’ve got to know when to hold ’em
Know when to fold ’em
Holding a position that is sitting out of the cash and is against the general trend or fundamentals is nothing short of gambling. In fact, I don’t call that Trading at all. I call it ‘Troping‘. That’s where you sit staring at the screens ‘Hoping’ the trade comes back your way! And before you ask is that a made-up word? Absolutely, and for good reason!
Do you Trade forex or Trope?
Nursing positions that are out of the cash and that you know is going to take you out is a terrible experience, yet I see so many traders do it. You are helpless, there’s nothing you can do to change the market except sit back and watch your hard-earned cash disappear! The feeling of defeat is overwhelming and for a lot of tropers, it’s the end of the trading road. But it doesn’t need to be like this.
Know when to walk away
And know when to run
If you only knew how the market worked huh? Only if!!
You’d know when to trade and when not to. Having this knowledge would remove a ‘massive’ amount of emotions you experience when trading. All of a sudden, you’d be trading in better market conditions and you wouldn’t have the brain explosions you currently experience. You wouldn’t have to worry about your ego or emotional impulses dominating your trading decisions. You wouldn’t let a losing trade trigger another 10 trades in quick succession, all with a losing outcome. It’s all because you chose to trade when it was right for you and not just because you had a spare hour or two or the day off!
None of this would happen if only you knew what you were doing!
Stop Troping and Start Trading
If you seriously want to make a go of trading and change your financial circumstances, then take control of your trading! Stop ‘Hoping’ things will go your way and wait for trading opportunities where the market setups are in your favor.
It’s simple. Be disciplined to follow the structure all professional traders follow:
- Stick to your capital management – do not risk more than you can afford
- Wait for clear direction
- Wait for a clear entry level
- Trade without hesitation and stick to your plan.
- If the structure of the trading opportunity changes after an event, reassess and if it is wrong, close the position out for a loss immediately!
- If you incur a loss wait for the next best trading opportunity…..by all means, do not get straight back in ‘Hoping’ you’ll get the cash back!
Trade Forex don’t Trope
To those Tropers reading this, take control of what you’re doing and get some ‘experienced training‘ before your trading experience ends prematurely! At the very least sit back and listen to Kenny!
And to Kenny Rogers, I thank you for all the money you have saved me over the years…… Cheers to you!