Direct from the desk of Dane Williams.
No, forex traders don’t actually predict where the market will move.
There is a common misconception that the most profitable forex traders somehow have a magic system or crystal ball that tells them where price is going to go next.
This however, couldn’t be further from the truth.
Instead of predicting where price is going to go, forex traders simply figure out the probabilities of a move in either direction and how to position themselves to maximise returns with the optimal amount of risk.
They put themselves in a position to make money if a high probability move does in fact play out.
While simultaneously managing their risk so that if an alternative scenario plays out, they don’t blow up their account and live to make another trade.
I know it might be a little disappointing to read that your favourite forex guru on Twitter isn’t actually any more special than you or I.
But that’s the truth.
They’re pretty much just big maths nerds who are able to consider the probabilities of multiple scenarios playing out and adjusting their risk accordingly.
Don’t respect them for being some sort of fortune teller who can predict where the market will move.
Do respect them for consistently putting themselves in a position to succeed and managing their downside risk to stay in the game.
It really isn’t…
But do you know what is sexy?
Making consistent profits as a forex trader and living the nomadic, self sufficient lifestyle that I have no doubt you’ve dreamed of from time to time.
Assessing probabilities and conducting thorough risk management is the complete opposite to a sexy, reckless gambler you may have your eye on at the poker table.
The most successful forex traders will never go all-in and risk their entire trading account on a single trade.
They’ll spread their bets wisely, ensuring that even if things don't go as planned, they live to fight another day.
Forex is about playing the long game.
Not a single, risky short term bet on a single outcome.
Money isn't made by predicting forex market moves.
It's actually earned purely through how consistent you are in doing the right things.
You see, the real magic is in how you manage your downside risk and nothing about avoiding losses altogether.
Because no matter what a forex guru who tells you he can predict where the market will move tells you, that's impossible.
Instead, it’s all about keeping that downside risk in check and maintaining a solid foundation for you to consistently put yourself in positions to succeed.
Let me wrap things up with some cold, hard truths about forex traders predicting where the market will move.
When it comes to forex, I want you to drill into your head that there are no certainties and only probabilities.
You need to embrace this reality and make calculated risks on the back of what the market presents to you at any given time.
You’re not predicting where the market will move, but reacting to whatever the market gives you and making decisions based on likely outcomes.
It's not about being right every time.
Just increasing your overall chances of making money over the long haul.
Best of probabilities to you.
