Forex Tips from my “1/2 A Loss in 22 Trades” System by Damien Hooper - HTML preview

7. Stop Predicting Price

When I started out on my forex trading journey, I made the assumption that what I was learning to do was predict price.  

In hindsight, I can see that assumption subconsciously dictated much of my early development.  Having that view meant I actively looked for systems, strategies and techniques that appeared to or attempted to predict price.  

What I came to learn more recently, is that attempting to predict price is a bit of a fool’s errand.  My current thinking is that a prediction of direction only occurs when the direction of the market is weak or unclear.  When the direction of the market is strong, there is no need to predict direction - it is obvious.  When the direction of the market is strong, the only question to ask is whether the trend is going to continue.

So if prediction of price is required - or even possible, I am not interested in that market at that time.  The result of that view and trading approach is that I only trade strong markets.

A distillation of my approach would be;

• Only trade the strongest trends,

• Only trade in the direction of those trends,

• Only enter a trade when that direction is confirmed by the current price action, and

• Always use solid trade management.

So I no longer try and predict price, i merely find a market that is moving and make sure it is still moving, then try and hop in the market using a precise strategy.

The result of my ‘precise strategy’ - is that most times i miss out on an entry in the market because the market doesn’t fit my specific requirements, or I miss out on an entry because the market stalls.  Sounds like a bummer right?

The important point is that neither of these scenarios cost me a cent!!!  

Unlike the days when a moving market was enough for this monkey to go chuck his hand in the jar and just hope he can pull it out afterwards, with disastrous consequences, I now sit and wait for the right conditions prior to a trade.

And I don’t hope i can get away with breaking my rules just this time - because I was sure the market was ready to pop.  Trading like that is just a crap shoot.