Forex Trading Core: Discipline is More Important than Forecasting

Many investors are used to following buy signals into the market, but often ignore or are reluctant to execute key exit orders. If this mindset cannot be adjusted, even the advice of top traders can lead to losses. To be clear, professional traders always have "risk response plans", and ignoring these plans is a waste of valuable resources. At work, I am often asked if there are good investment opportunities, and I am happy to share research findings. But I never answer the question, "Where will it go up (or down)?"

Whether it is foreign exchange, indices or individual stocks, this is a question that I cannot give a definite answer to. I usually respond with "I'm not sure either", or "will fluctuate until the trend changes". To hear such an answer, the other party tends to have two reactions: either disapproving, believing that the analytical ability is limited, or secretly displeased and feeling reserved. Both reactions are frustrating.

First, if investors are interested in delving into the accuracy of market forecasts, I suggest taking a long-term look at the opinions of particular analysts, looking at the deviation of their predictions from actual movements, the average error and the accuracy rate. You will find that the vast majority of price forecasts are inherently imprecise. This has little to do with the analyst's ability, because predicting the market itself is an extremely difficult task. A responsible analyst should provide clear assumptions and extrapolate from them to current market trends, and then advise readers to follow the trend.

Second, as a trader, I never set a specific target price for the foreign exchange market. In the professional decision-making process, the focus should not be on forecasting the market, but on evaluating and following the actual trend. Far from being helpful, preset prices often lead to premature exits, missed potential profits, and even lead to contrarian operations, resulting in heavy losses.

The system for observing successful traders at home and abroad has clear entry and exit rules, but few can consistently generate large returns by predicting prices in advance. A trader's primary concern is whether his position is in line with the direction of the market trend. As long as he keeps an objective eye on this, he will be able to respond in time when the market turns.

In other words, accurately predicting the price is not the key to success, but a solid entry strategy and strict operating discipline are the core. I admire the courage of those who try to accurately anticipate the bottom line, but the sound trading philosophy advocated by Pakatan Harapan is more focused on the pursuit of low risk and sustainable profits. As for the work of capturing extreme points, it may be left to those highly skilled investors to try.

foreign exchange marketAnalysis is a science, not metaphysics. Therefore, we should approach it from the perspective of scientific research. In the scientific method, any event has its preconditions, and we analyze various possibilities through probabilities. The various ratios that are common in daily life, such as success rates, probabilities, etc., reflect this idea.

We must make it clear that price analysis is a science in itself, so price movements are necessarily based on specific premises and cannot be guaranteed to be 100 per cent accurate. When conditions change, or unexpected events occur outside the statistical model, the original inferences naturally need to be adjusted. Therefore, no matter whose advice you rely on to make buying and selling decisions, you must have a risk control plan and a stop-loss strategy. If after following advice and losing money, you are filled with anger, reluctance or confusion rather than decisive handling of positions, then you may have regarded the analyst as a soothsayer.

No forex trader can win every battle. However, by achieving "make more and lose less" and strictly enforcing stop losses, the results of professional traders and the general public can be significantly different, which reflects the importance of trading discipline and risk management that Pakatan Harapan ** values.