This paragraph describes what pushes a person to use all kinds of locks, averaging and other things. If you are interested in the very phenomenon of the castle and the practical aspect of working with it, scroll down. But if you are a brave “lockman”, and you are already tired of it, I invite you to read it. I hope the following will clarify something.
In short, a person does not want to make mistakes. But if you don’t know the future, sooner or later you will make this very “mistake”, for example:
- open the deal “not there”;
- the price will hit your stop loss, and then immediately go back
- You set a take, to which the price does not reach 2 millimeters and turns around
To make mistakes is “painful” because you feel stupid. And since we want to avoid this feeling – at first we are eager to find a tool that will help us “more often (and in fact, we hope 100% of the time) to be right. We ourselves do not even understand what kind of tool this should be. Therefore, the surroundings described above – when it is generally not clear what the guys have on the monitors – are so attractive. It seems that they have the very same tool there, and that’s how trading is made.
At first, the trader is usually extremely dissatisfied with himself, because often (in his opinion) is mistaken. And while a trade-improving tool has not yet been found, the forex trader can come to a “position lock” or a “lock”. The castle allows you to disagree with the loss, giving yourself a chance in the future to avoid it all the same. In fact, at heart, the trader feels the fallacy of this approach and the impossibility to earn stably with it, but he can not help himself, because he has not yet been 100% convinced of this (yes, it’s not the lack of willpower).
The trader is hurt by the feeling that the loss is a consequence of poor-quality market analysis. Like if a profitable deal means everything is correctly understood. If it is unprofitable – something understood not so. Locking gives hope that “now I didn’t take into account something”, and the next time I’ll just “take everything into account” and we can avoid the loss. But this thesis is based on a misunderstanding of the situation regarding the nature of price movements, which the psyche of a novice trader is not yet ready to accept (yes, yes, it’s not stupidity)
A correct understanding begins with the inner feeling that a losing trade does not characterize a trader in any way – neither as stupid nor smart, in any way. A losing trade also does not characterize the quality of the chart analysis in any way – it is poorly or well analyzed.
“Normale” begins when you yourself see/realize/feel: a losing trade is just an impersonal (such as rain or wind) evidence that the price went not where you were waiting. At the same time, there is an understanding that it is not in your power to find out in advance where she will go. And that it will always be beyond your power.
A profitable deal is the same impersonal evidence that the price has gone in the expected direction. Again, when in advance you couldn’t find out by any signs where she would go. Neither by trend lines, nor by “strong price level”, nor by any indicators, etc. And then the trader calms down and takes the first step on the path of conscious trading.
If we cannot predict the future, but we must somehow make money, then the inevitable conclusion is this: trading is just profitable trades minus unprofitable trades. Those unprofitable transactions are allowed as a natural part of the process and not some kind of flaw. As a result, in order to earn money, you need to find such entry parameters that will be profitable not at the end of each transaction, but at the end of several. This means that you need to identify a “template for a perfect deal.” What is meant? Let’s look at an analogy.
Suppose you are a business owner and hire an employee. With a high degree of confidence, I can say that you will have priority on people with a presentable appearance, with experience and “positive dynamics” in previous workplaces – so that there are increases and/or so that not every 1-2 months work at each previous place. It turns out that you have a certain “template” of how your employee should look like. Those who fit this template will be sent to the next stage of the interview. Those who do not fit – immediately weed out. So you can select several candidates who are more likely to suit you.
Note: the template can not say anything about the skills of candidates, it just allows you to weed out the initially uninteresting for the company. However, among the “past”, there will certainly be less competent (unprofitable for the company) and more competent (profitable for the company).
Is it possible to choose such template parameters that will allow 100% to reveal “profitable for the company”? In my opinion, no.
Those. a template is some common-sense prefetch. But then what is “common sense” in trading?
Common sense in trading is performance. In simple terms – the financial result of trading decisions.
First, you need to find any recurring price situation, fasten the entry/stop/take rules to it and test it. This will be our “template”. If according to the results of 100 transactions according to the template, the deposit has decreased, the template is bad. You need to either look for a different price situation or change the entry/stop/take rules. If the deposit has increased, we leave the template.
All. Now we have an understanding of the situation in which we need to conclude deals. the result of applying our template is positive – there is no point in guessing where the price will go at any given moment. The dilemma becomes different: whether a suitable template drawn on the chart or not.
Moreover, in each individual transaction, we will understand that yes, it may turn out to be unprofitable. But this does not bother us, because the result is a SERIES of transactions, and not just one. Will you become sad about a losing trade if you know that your trading strategy allows you to live the life you want? 🙂
PS Naturally, not everything is so simple and the template will need to be upgraded many times to become “that”. How to understand that he is already “the same”? And how did you understand that you learned to walk? 🙂
Well, now to the topic.