When you are over prepared you run the risk of ‘marrying’ your market opinion.
All that hard work went into doing your analysis – it’s easy to become blinkered to any other possibility but the one you envisage.
You may analyse the markets yourself, or you might invest in the picture put forward by a market commentator. And at a specific moment in time it might all make perfect sense. The logic is there and it shines bright.
But don’t discount how painful it can be to shred your hours of hard work, or write-off the money you invested in third-party analysis when the picture shifts.
The markets are organic beasts and the picture DOES shift. Things can be turned on their head quickly.
So instead of shooting yourself in the foot, continuing to buy JPYUSD on every dip just because it seemed a great idea three days ago, despite the market having since developed into a raging downtrend, you need to take a more flexible stance.
(That JPYUSD situation is a purely theoretical example by the way. Not a comment on the current market!)
The ideal middle-ground is not under prepared, not over prepared, but present in the moment and ready to react to whatever comes next.
It all ultimately leads back to the 3 truths of trading and the readiness to take responsibility for your own actions.
I’m sure you’ve heard me mention the 3 Truths before, but they really are the essential foundations of a healthy trading approach:
The 3 Simple Truths of Trading
- You don’t need to know what will happen next to make money.
- You will experience a random pattern of winning and losing trades
- Profit is made simply by gaining more money on your winning trades than you give back on losing trades.
At a high level, there is little more you need to know in order to trade well.
Everything else that comes after – the buying and selling signals, the position sizing, the software and indicators – they are all just tactics that support these 3 rules.
So if you really want to find the ideal middle ground – the flexible stance – my advice is to take the 3 truths of trading on board.
I mean REALLY take them on board.
Forget how deceptively simple they appear. You’d be surprised how many losing trading campaigns can be easily avoided by honestly applying these 3 simple statements.
So make them your own. Ask yourself if you are operating outside the 3 Truths even as we speak.
And if you’d like a transparent step-by-step working model of the 3 Truths to follow along with, placing flexible and relaxed trades at strategic places in 5 heavily traded Forex markets, generating 20-30 trades per month, with a better than 60% chance of DOUBLING the money you risk on each trade…
Then I have news coming soon that you might like to watch out for.