Revaluating the Grey Area of ‘Good’ and ‘Bad’ Trades in Forex Trading
For many years, I used to think of trading as quite a basic concept, mainly as either good or bad or black and white. If the trade I took ended up in my favour then it evidently verified the rightfulness of my assessment and judgment.
Conversely, any time my trades resulted in a loss, I had the tendency to deem it a “poor” choice and then experience tremendous guilt. In other words, if I won, I thought of myself as a genius and if I lost, I considered myself a big fool.
However, as I’ve gained more experience, I’ve come to understand that even in the area of profits and losses, there are many shades of grey. It’s not as simple as it appears, right?
Let me give you an example from last week.
On Monday, I took a gamble and went long on a specific company titled “Blah-Blah (1)”, shortly prior to their 3-monthly profit report. My instincts told me they would more than likely beat the projections and boy, was I right. In less than 60 minutes, their share value had climbed 10%.
It could be said that I got lucky this time around, as my decision wasn’t based on a firm conviction.
To be honest I didn’t thoroughly weigh the potential pitfalls. If the claims had turned out to be inaccurate, I would have taken a hit on a gamble. Therefore, could I truthfully refer to it as a “successful” trade just because I pocketed a profit?
Now, picture this: It was just last night that I found myself in the midst of a thrilling financial rollercoaster. As the Federal Reserve’s assembly inched ever closer, I made a daring motion and assumed a bearish wager on the “Blah-Blah (2)” company.
My intuition predicted that the announcement would likely cause a surge in interest rates, which would undoubtedly spell trouble for growth stocks. To my surprise, the universe had a different plan in store for me.
As the session progressed—I mean, the meeting unfolded—my chest pounded with expectation. Would my guess be justified? Would I be successful? Unluckily, destiny had a different plan. The rates of interest stayed unaltered, and I was stunned to discover that “Blah-Blah (2)” exceeded all expectations and advanced.
It was a bitter pill to swallow as I watched my aspirations and goals disintegrate before me. I was forced to sell at a loss and dejection overflowed me like a surging tide.
In the past, I would have scolded myself for this misstep, considering it a “blameworthy” and all-too-sorry mistake. However, as I sit here, pondering the issue, a brand new cognizance rises in me. My hypothesis, my examination—it all made perfect sense given the information available to me at the time.
In light of the Federal Reserve’s track record of throwing unexpected elements into the mix, can I really say that my assessment was completely “wrong”? Or was it simply a reasonable miscalculation in the face of a complex and ever-changing scenario? Maybe a result that isn’t favourable does not mean that I made the wrong decision.
It’s becoming clear to me that there is a world of grey when it comes to distinguishing good trades from bad ones. It’s not just about the green and red numbers on our profit and loss statements.
A lucrative trade may retain hidden dangers that weren’t appropriately handled and a loss does not necessarily symbolize a collapse of tactic or aptitude. There are important lessons to be captured from both profits, returns, and losses if only we open our minds to new perspectives.
Let’s face it, even the most capable investors encounter highs and lows. The stock market is a wild and unpredictable beast and occasionally, loss is outside of our mere power—such as when unforeseen international affairs take place. This is not a pure game of guarantees but rather a game of probabilities.
Despite the difficulty, there is no need for despair! The way to succeed is to hone your critical thinking skills, make judicious decisions about risk, and shift your strategy if it turns out to not be fruitful. On top of that, it is essential to remain calm and refrain from beating yourself up during a period of downswing.
These periods are necessary for growth, as they help us identify our weaknesses and work on them.
It’s essential to accept both the uplifting and the adverse days with humility, considering each as a chance to acquire knowledge and expand.
I’m still mastering how to navigate the grey area but I’ve come to realize that broadening my outlook has provided me tranquillity and eradicated the impractical, unrealistic pressure to always be right.
It is undeniable that the market is far from easily definable in terms of black and white and our judgment of ourselves should be no exception. By striving to learn from each action, flexing our analytical capacity, and applying critical thought, we can gain the most success in an unpredictable environment.
Undoubtedly, this is the best course of action available to us; that’s all we can do in this crazy world.
The journey continues and never stops, and I’m devoted to honing my technique, adjusting where appropriate, and concentrating on the far-reaching development rather than scrutinizing every lone result.
Never forget, our trading wisdom forever comes from discovering, not arrogance, that we comprehend everything, and we have to be calm with the uneasiness of not recognizing and embracing results we can’t wholly anticipate or control.
So, instead of allowing ourselves to be disheartened when confronted with monetary difficulties, let us learn to welcome the complexities and uncertainties that accompany the profession of trading. It is through these paradoxical shades, both triumphant and challenging, that we grow and evolve as traders.
And nobody knows when our next trial will be the one that sends us down the unknown route, furnished with the knowledge we gained from our preceding tries.
But you know what? I think there’s something to be gained from both success and failure. They’re like the yin and yang of life. So, we should totally embrace them with open arms.
