What lessons can forex traders learn from Murphy’s Law - demo of forex trading

What lessons can forex traders learn from Murphy’s Law ~ demo of forex trading

If anything can go wrong -it will. That is the summation of Murphy’s Law. That phrase has an important significance on our bearing as forex traders whether pros or amateurs. Applied to the forex market, it simply means that we can never completely insulate our open positions from possible losses no matter how perfect our trading strategy might seem to be. Our relationship with the forex market is never a match made in heaven and many a times we will suffer heart breaks.

The forex market has a fickle organ that mutates on every blink. It is a liquid affair that can only be controlled to a certain degree but never tamed with an assuring finality. A perfect formulation of a trading strategy might be nothing but a deceptive display. Murphy’s Law should therefore be incorporated into our trading of forex as a reminder that we should never risk more than what we are comfortable of losing. This is the general rule of thumb and must be observed no matter the certainty we hold on the direction that a particular trade set up will take.

Learn to gear up for the vicissitudes of the forex market’s treachery. No one has mustered the forex terrain to a level that they will never suffer a losing trade. There is therefore no justification for risking more than you should per trade. If you are comfortable with risking $100 per trade then that should be the case for every set up no matter your degree of certainty. We can never be sure enough and the credibility of a trade set up can only be confirmed upon achieving a losing or winning trade

What is to go wrong will ultimately go wrong. Therefore always use a stop loss. A bullish market might seem destined to greater ascendancy but it might just spiral down at any moment and wipe away all the profits already made. The stop loss ensures that the bunks of your portfolio are not broken no matter how hard you are hit by the tides of a downward spiral. In forex, stop loss is a safety measure that limits the damage if a trade goes against us.

Do not wait for the exact top or bottom of any trade. Be satisfied with the attainment of your preferred risk reward ratio. Quit when the circumstances are in your favour. Waiting to attain more than you bargained for is a show of greed and a reflection of your ignorance to the uncertainty associated with the forex market. Plan your exit before the entry. Waiting for the exact top or bottom betrays a lack of strategy and a failure to appreciate the fact that anything can go wrong at any moment.

Anything that can go wrong will go wrong so there is no need of opening more than one position for a single trade. You will end up losing on two fronts from which you might never recover. Do not bet on two positions because all the hype of a racing market is just a mere passing wind. The forex market is a moving stream that erodes our reality by paying little attention to our desires. Treat the markets with contempt by trading only one position. Do not feed it more than it deserves for it has a bad habit of biting the hand that feeds it.

Conclusively, be wary of trading without a stop loss, risking more than you should and waiting for the exact top or bottom of a trade set up. You can never bet on the market’s certainty. All conditions may seem appropriate or conducive to make money, but that is only at that moment. Remember, if anything can go wrong -it will.
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