Happy New Year to everyone!
I am excited to share with you that my article entitled “Automation, Diversification, and the “Wrong Way” Approach to Forex Trading” has been published in the Fxtrader Magazine January 2012 edition. You can read the online version at its website: http://www.fxtradermagazine.com. Below is an excerpt of my article.
Automation, Diversification, and the “Wrong Way” Approach to Forex Trading
By Winsor Hoang
94% of New Year’s resolutions made fail. 95% of Forex traders lose money. Could there be a connection here? I believe that the answer is, ‘yes’, and can be found in basic human nature. If 95% of individuals trading in the Forex market lose money, how do the remaining 5% make money? The answer is simple. They employ diversification, a consistent trading approach, and proven, successful investment philosophies that overcome the flaws of human nature that lead to loss of principal. What are the elements of human nature that affect success or failure of New Year’s resolutions or Forex trading the most? Desire, emotion, and discipline.
Desire - the motivator that causes a person to take the first step toward achieving a goal. In the case of the New Year’s resolver, it might be losing weight, ceasing smoking, or making more friends. For the Forex trader, it’s often the desire for greater income, a retirement nest egg, or peer recognition.
Emotion – something that often hits the New Year’s resolver early the next day. Like the person with a hangover who promises the next morning never again to drink, the emotion of last night’s guilt disappears with the New Year’s Day hair of the dog. Emotion constantly tugs at the Forex trader for attention. Bits and pieces from cable news stories, advisory websites, and emails all compete for attention with a trader’s chosen system. Like self pity that sways a dieter watching another person eat that donut, it’s easy to see how a story can make fear or greed part of a trading decision.
Discipline – maybe the worst of all. The rules of the diet say 1,000 calories per day. What’s another 10%? So I set my maximum down to 100 pips. What’s another 10, 20, or 50? Violating established trading rules and letting losses accumulate in hopes that a price change will make things right, failure to take a reasonable profit, carelessly betting based upon a past ‘pattern,’ leads many Forex traders to the 95% loser door…
Read the entire article at Fxtrader Magazine January 2012 edition or on my website at http://www.ctsforex.com/download/Fxtrader.pdf
Winsor Hoang
I am excited to share with you that my article entitled “Automation, Diversification, and the “Wrong Way” Approach to Forex Trading” has been published in the Fxtrader Magazine January 2012 edition. You can read the online version at its website: http://www.fxtradermagazine.com. Below is an excerpt of my article.
Automation, Diversification, and the “Wrong Way” Approach to Forex Trading
By Winsor Hoang
94% of New Year’s resolutions made fail. 95% of Forex traders lose money. Could there be a connection here? I believe that the answer is, ‘yes’, and can be found in basic human nature. If 95% of individuals trading in the Forex market lose money, how do the remaining 5% make money? The answer is simple. They employ diversification, a consistent trading approach, and proven, successful investment philosophies that overcome the flaws of human nature that lead to loss of principal. What are the elements of human nature that affect success or failure of New Year’s resolutions or Forex trading the most? Desire, emotion, and discipline.
Desire - the motivator that causes a person to take the first step toward achieving a goal. In the case of the New Year’s resolver, it might be losing weight, ceasing smoking, or making more friends. For the Forex trader, it’s often the desire for greater income, a retirement nest egg, or peer recognition.
Emotion – something that often hits the New Year’s resolver early the next day. Like the person with a hangover who promises the next morning never again to drink, the emotion of last night’s guilt disappears with the New Year’s Day hair of the dog. Emotion constantly tugs at the Forex trader for attention. Bits and pieces from cable news stories, advisory websites, and emails all compete for attention with a trader’s chosen system. Like self pity that sways a dieter watching another person eat that donut, it’s easy to see how a story can make fear or greed part of a trading decision.
Discipline – maybe the worst of all. The rules of the diet say 1,000 calories per day. What’s another 10%? So I set my maximum down to 100 pips. What’s another 10, 20, or 50? Violating established trading rules and letting losses accumulate in hopes that a price change will make things right, failure to take a reasonable profit, carelessly betting based upon a past ‘pattern,’ leads many Forex traders to the 95% loser door…
Read the entire article at Fxtrader Magazine January 2012 edition or on my website at http://www.ctsforex.com/download/Fxtrader.pdf
Winsor Hoang
