If you are lamenting that you are having difficulty winning at Forex, it may be because you do not know what “winning at Forex” is all about in the first place.
In this article, we will show you how you can have a real-life experience of “winning at forex trading over a long period of time.
Learn the right way to win and lose through probability thinking, which is essential to winning in Forex.
This way of thinking is painful and will never win
First of all, let me explain the wrong way of thinking, which is assumed by beginners and those who are struggling to win.
Wrong way of thinking that prevents you from winning in Forex
- I don’t want to settle for a loss (I don’t want to lose a single trade).
- I definitely want to win this trade.
If you keep this kind of “no-win” mindset, Forex will become a hard and painful experience, and it will become difficult to continue trading for a long period of time.
Because no one knows the future of the FX market, it is impossible to keep winning with a 100% winning rate.
No matter how good a trader you are, there will always come a time when you have to cut your losses.
There may be times when a position with unrealized losses is fortunate enough to return to its open price and close at plus or minus zero. However, if you continue to leave your positions open in the hope of avoiding losses, there will eventually come a time when the unrealized losses become so large that you will be forced to cut your losses.
Also, because no one knows the future of the FX market, you can never be sure that you will win. You cannot win just because you are determined to do so.
No matter how good a trader you are, it is always possible to go against the market from the moment you take a position without ever making an unrealized profit.
There will always be situations in Forex where you will be betrayed by your desire to “never lose money” or “win for sure.
If you have the wrong mindset, you will feel fear, pain, and suffering every time you trade.
In such a state, you will only get further and further away from “calmness and equanimity,” which is an essential psychological state for a winning Forex trader.
Common misconceptions that prevent us from winning
Behind such wrong thinking is the fear of incurring losses.
It is very difficult to accept the reality that one’s money is decreasing when one is doing forex with the intention of increasing one’s precious money.
This is because it is a natural reaction of human instinct.
Why are you so afraid of loss?
Suddenly, let us return the topic to the time when humans were primitive.
Humans have been hunter-gatherers for as long as 2.5 million years. Our ancestors chased prey, gathered nuts, and lived for the day.
The history of agriculture is about 20,000 years old, and the history of modern civilization is only about 150 years old, so we can see how long the hunter-gatherer lifestyle was.
The most important thing in the daily lives of people at that time was, above all, to survive and procreate.
If there was a possibility of losing their lives, they would try to avoid it altogether, and they would do whatever it took to save their lives.
They will do everything in their power to finish off the prey in front of them, and since missing it means future death, they are truly desperate to hunt.
They will eat the nuts they have obtained in the forest, little by little, with great care, so that no one will take them or lose them.
In other words, they were very sensitive to the risks involved in survival.
Such people are your and my ancestors, and the fear of risk is inherited on a genetic level.
The reason why we are extremely afraid of a decrease in margin is because our instinct is fearful: “The nuts, the precious food that sustains life, will decrease!”.
I’m going to win!” in the current trade. is because you instinctively feel a sense of danger, as if you would go hungry and die if you missed your prey.
It is natural for human beings to be afraid of losses and obsessed with winning in forex trading.
For more information about Forex trading and fear, please refer to the following article.
Your instincts are just misguided
If our instincts as human beings are the cause of our wrong thinking that prevents us from winning in forex trading, do we have to force ourselves to suppress or change our instincts?
No, you do not have to.
You certainly have the same instinctive mechanism to “discover and be alert (fearful) of risk” as your ancestors did.
In primitive times, this “alert (fearful) mechanism” was useful for survival.
However, for those of us living in the modern civilized world, this instinct has become a very excessive mechanism that produces overly exaggerated reactions.
In other words, this mechanism can easily malfunction at the slightest kick in the daily routine.
Then, don’t you think that by preventing this “fear mechanism” from malfunctioning while trading, we can trade with a calm and normal mind?
There will be losses, and there will be times when you don’t win and miss out on profits, but if your instincts convince you that such problems are “not life-threatening risks,” then you will feel less fear there.
How do you keep the “fear mechanism” from malfunctioning during a trade?
So what can you do to prevent your “fear mechanism” from malfunctioning while trading?
If you are afraid of losing money or obsessed with winning because you believe that “trade outcome” and “life-threatening risk” are the same thing, then you need to break the “false connection”.
By doing so, we can prevent the “fear mechanism” from reacting to the outcome of the trade.
The method for doing this is the “dice game” that I am about to introduce.
Experience “long term winning forex trading” with dice!
All you need is a single dice. If you do not have a dice at hand, you can use a hexagonal pencil with numbers written on it.
It is important to try it with your own hands, so please use actual dice and pencils as much as possible.
If you are unable to prepare them, there are Random Number Generator on the Internet that can be used as a substitute.
How to play the dice game
Rules
- Starting with 10 points.
- If you get 1, 2, 3, or 4, you win +1 point.
- If you get a “5 or 6”, you lose -1 point.
- Repeat until you reach 30 points.
The only rule is this.
Add or subtract points in your mind according to the roll of the dice until you reach 30 points.
The points increase or decrease like this: ……10,9,10,11,12,11,10,11,12,12,13,14,13……
Let’s get started.
Please roll the dice as often as you like.
It is meaningless to just know the expected value as knowledge
If you know anything about expectancy, you may have noticed that this is an “expectancy plus” game.
In other words, it is mathematically proven that this dice game is a game where the more you play, the more your score becomes positive.
However, have you ever actually experienced the “ever-increasing points” with your own hands?
You may have known in your knowledge that the more you repeat the game, the more points you get.
However, have you ever seen how the points increase as you win and lose, and how many times you have to throw the dice to triple your points?
If you realized, “I knew this as knowledge, but I never actually tried it ……,” then this is a great opportunity for you.
This is your chance to take what you knew as knowledge and make it your flesh and blood.
Keep rolling the dice, and as you win and lose, the points increase and decrease, and gradually the points get bigger and bigger, and that is the true picture of “long-term winning forex trading.
Let’s roll the dice.
Dice Games Teach Us “Probability Thinking”
How did you like playing the dice game?
- “It’s hard to win and the points don’t add up.”
- “I had a lot of wins, and the points accumulated very quickly.”
- “There were times when you didn’t win enough and the points didn’t add up and you were at a standstill.”
I’m sure you feel a lot of things, but tripling your initial points is a very wonderful result when applied to actual forex trading.
It is the same as if your starting margin of 1 million yen had turned into 3 million yen.
Even though it is in the form of a game, it means a lot to you to have experienced it in real life.
Because it contains probability thinking, which is the “correct way of thinking about FX trading”.
The right way to trade to keep winning = probability thinking
The right way to keep winning = probability thinking
- Cutting losses is part of the process of accumulating profits (winning and losing are “two sides of the same coin”).
- Winning and losing (the result of settlement) of a single trade is meaningless.
If you have a good intuition, you may have seen this and thought, “Oh, ……! and you may have realized that you have been reading this for a long time.
Now, let me explain the proper way to think about trading in order to keep winning.
First of all, a loss on a position is neither something to be avoided nor a bad event.
Losses are a natural part of the process of accumulating profits. Being able to cut losses properly shows that you are practicing the correct way to lose.
The points in the dice game kept increasing, not because you made a winning roll or because you were good at avoiding losing rolls.
Because you can never change the roll of the dice with your own hands.
So how did your points triple?
It is because you kept rolling the dice.
You kept rolling the dice over and over again, win or lose, without being bound by a single result, and your points tripled.
In fact, at that time, you were unconsciously acting with the goal of increasing the number of times you rolled the dice, not with the goal of “winning this one dice roll.
This is probability-based behavior in Forex and the correct approach to a game with positive expected value.
During this game, did you just keep rolling the dice silently, thinking “I can’t seem to get to 30 points ……”?
I am sure that you did not think about what to do if the next dice roll was a losing roll, or how to roll the dice to win without fail.
I am sure that they were concentrating on rolling the dice one after another. And this is the state of being able to act with the correct mindset of probability thinking.
To use this as an analogy, winning is “the right foot,” losing is “the left foot,” and increasing points is “keeping moving forward with both feet.
If you see someone saying, “I don’t want to use my left foot,” what do you think?
Now, in the dice game, whether you win or lose has nothing to do with money, so you could safely continue rolling the dice.
If I had played this game with money, when I lost two or three times in a row, I would have said, “Oh, I lost again. I can’t win! I’m done!” or “I’m too scared to play dice anymore ……”, there is a great possibility that you would end up saying “I’m too scared to play dice anymore”.
But now that you have tripled your points in the dice game, you must be thinking:
The more you roll the dice, the more money you make, so why not just keep rolling the dice whether you win or lose?
And if you gain more experience and become able to think that way naturally in Forex, it is proof that you have learned the right way to win and lose and have acquired “equanimity as a strong trader.
When you have that equanimity, your “instincts,” which had been malfunctioning because you thought that Forex trading was a “life-threatening risk,” will become much quieter.
Summary & important basic premise “superiority of the method”
Conclusion
- Behind the wrong mindset that prevents us from winning is the fear of incurring losses.
- The “system of caution (fear)” malfunctioned and made FX difficult to play.
- In order to stop the malfunction and learn “the right way of thinking (how to win) = probability thinking”, we play the dice game.
It is recommended that you play the dice game not only once, but also many times under different conditions.
The more you do it, the more the correct way of thinking (how to win) = probability thinking will take root in you, slowly and steadily.
Now, I almost didn’t mention this time as a matter of course, but the basic premise is that dice (trading) requires superiority.
It is not something that can just continue in the dark with a method that may or may not win in the long run.
This is where chart verification becomes important, and whether or not you have what is called a “long-term winning method”.
The following article explains how to verify the FX market, so if you are worried about verification, please read this article.
The above is about the need to understand the concept of probability with dice in order to win in Forex.
There is a sequel article
This article explains small loss and large gain trading using the dice game as a subject.
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