Sufficient experience in the Forex market may fool some traders into believing that they can completely predict price movements.
After all, if you have years of screen time and have dedicated 10,000 hours to developing your analytical skills, it can be tempting to assume that you know the markets inside and out.
This kind of assumption is dangerous because it can eventually turn into what I like to call “Merchant God Complex“, where a person has an unshakable belief in his infallibility in predicting future price movements.
This usually manifests itself when a Forex trader becomes so confident in his ideas that he refuses to admit the possibility of error.
But, as anyone who has experienced their fair share of losing trades (and that applies to almost every trader!) can attest, uncertainty is part of the Forex market’s character.
No one – even the biggest financial figures with access to large amounts of economic information – can come up with 100% accurate price movement predictions.
Insisting that you have a special ability to accurately predict how a currency pair will behave may ultimately lead to your downfall as a trader.
Of course, this is different from getting a good sense of market behavior through consistent, deliberate practice. What this process aims to achieve is the ability to actively learn and improve throughout your trading career.
This means being able to accept your losses, admit your mistakes, reevaluate your Forex trading strategy, and make necessary changes. In fact, the goal of deliberate practice is the exact opposite of believing you are an omniscient and omnipotent trader!
Instead of making predictions, learn to develop biases.
The former represents the expectation of a certain (and usually fixed) outcome while the latter is more flexible as it is open to confirmation or denial by the markets.
Once you accept the fact that it is impossible to completely predict market behavior, it will be easier for you to make adjustments to your strategies.
Focus on managing your risk well and controlling what you can control. This includes looking for potential triggers and price reactions, monitoring your position size, stops, and holding periods.
Ultimately, you have to remember that the market is the boss. It doesn’t care at all which direction you expect the price to go.
To be consistently profitable, you must learn Trade what you see, not what you think.