Understand that as a trader, whatever strategy or indicator you use has no way of telling you where the market is going to go next. You know two things, it’s going to go up and down and sideways, accept it! No trader has control over where price will go next.
You can download the market structure reversal indicator here: https://www.mql5.com/en/market/product/46295
Download the dashboard to alert to all time frames and pairs here: https://www.mql5.com/en/market/product/62751/
NOTE: DOES NOT REQUIRE THE INDICATOR ABOVE TO POWER IT!
Video Transcript
This video is probably going to seem really obvious but bear with me. It’s all about control and what happens when you hit that buy or sell button. So basically I’ve titled it You Are Not in Control which is pretty obvious. So we’re going to look at in this video a couple of areas which were light bulb moments for me and when I realized what was happening in the market and what I had control over and what I didn’t it made me completely refocus my trading to not looking for a great strategy with a great strike rate to concentrating on how the market works and how I can extract a profit from it. So for a long time I was looking for a system or an indicator that predicted with high accuracy where price was likely to go. So many times I was on forums and chat systems with other traders and there would be this little gif that would appear with a crystal ball basically saying nobody knows and I said well obviously somebody does because every time you take a trade you’re expecting price to go in a certain direction. Unfortunately there is no indicator or system as I’ve realized out there that can do that. It sounds really obvious but until you actually think about it and accept it you’ll keep looking for that holy grail indicator or system and keep hopping around trying to find something that’s good and profitable and works for you.
You have to accept that it’s impossible to predict the direction of the market with any indicator, technical analysis or any fundamental news events. So basically you have no control over anything when you’ve hit that buy and sell button. The problem with trading is we’re not flipping a coin here. If you flip a coin you’ve got a 50-50 chance of being right or wrong. If we’re right on direction as a trader 50% of the time it doesn’t necessarily mean we’re going to make money because we can be right on price going up in the direction that we’ve expected it to go but whether it hits our TP or not is another thing. How many times have you looked at a chart with an open trade on and prices got to within a few pips of your profit target and then turned around and it’s gone completely the other way and ended up in a loss?
Happens all the time. So it’s something that we’ve got to accept as traders and what I’m going to do is have a quick look at the two things we know as constants in the market and hopefully this will help you understand why risk reward is so important in your trading and that you should stop looking at your charts once you’ve entered a trade because you’ve got no control and the thing that drives us mad as traders is watching charts, egging our trades on to try and hit our TPs and that basically throws out all of our risk reward because we end up taking profit on our trades early. So there’s two things that we know for sure. When we hit the buy or sell button, price is gonna go up or it’s gonna go down or if you like it’s gonna go along sideways. What we know is there’s two directions it can take eventually and that it’s going to move through time.
Okay so we’ve got time at the bottom of our charts, we’ve got price at the side of our charts and the two constants that we know about is price going up, down and sideways. Okay those are the traders. We have no control over where price is going to go at any point in time. So if we were to take a trade here for example and put our stop loss down here. Let’s say for example we had a TP, we’ve got some price action to the left here and our TP is going somewhere around here right. What happens as traders is we want to see our trade playing out we want to see if it’s going to be profitable or not so what we do is we check our P&Ls all the time to see how far that trade has got towards our TP whether it’s stopped us out exactly what’s going on with it and the problem with this is obviously when we see a trade go like this in our direction we’re getting excited and thinking oh we’re over halfway towards our TP now and then we’ll see it pull back.
And when it pulls back we get scared which is human nature. You see a big down candle like this when you’re long you think oh my god this is going against me and what ends up happening is you take your money because you have fear that the trade is going to come back against you, go back to break even or stop you out. So you take what you’ve got. The problem is the risk reward your strategy requires is 3 to 1, 4 to 1, 5 to 1, whatever it may be and you’ve just taken your trade off before it’s hit your TP target. So what you’re doing is you’re reducing the edge of your strategy and you’re reducing the probabilities of you making money in the market by getting out of the market too early. As you can see with this particular trade it would have just chopped around and chopped around and probably up here you would have been going oh my god it’s so close shall I take it shall I take it and you probably would have taken it there as well.
If you hadn’t of taken it here it’s like pulling back against you. Unfortunately you could have had your full TP but you just didn’t let it play out. So that’s something that we do all the time as traders and it’s very difficult not to do it. So as traders we have to be patient. We know that price is going to go up and down in the market. Okay we know this is going to happen, it’s going to chop around. As traders what we want it to do is just get up here and hit our TP which we know never happens in real life. So we’ve got to be patient, we’ve got to understand that price is going to move through time and it’s going to take a while for it to eventually get to the destination. So to explain this concept a little better, and one way it was explained to me by a mentor I had many years ago was imagine that every time you take a trade you’re getting on a train.
You cannot stand in front of this train, you cannot control this train, you basically get on at the station and the train is going to pull out of that station. So let’s say we’re getting into a trade at this level here and we get onto our train and the train is going off in our direction and it’s going to stop at the next station which is here. Now that train has now got two options it can either come back to the station we initially got on at or it can go off to the next station. But what it does out of our control. We have no control. So what we have to do as traders is set your TP and your stop loss which is calculated by our edge and the probabilities of our system and just let the trades play out. Do not touch them again. Now this train could pull out the station and do this for days, hours, weeks, who knows what it’s going to do and where it’s going to go or how long it’s going to take to get where we want to be.
And if our stop loss station is down there and our TP station is up here, we know it’s going to get to one of these, but how long is it going to take? I don’t know, you don’t know, no one knows. But we know it’s going to get to one of them. We have to let that edge play out in the market. And the best way to do that is when you enter a trade, okay, do this. Close your chart. Do not look at that pair again until it’s hit TP or stop loss. Just forget it, okay, because you’ve got no control stop trying to control the market and stop thinking that you can do something about a trade You look at it because you’re excited about it hitting a TP or a stop loss But in reality, there’s nothing you can do about it. So why look at it again?
Concentrate on new trades that are coming up new opportunities that are coming up when you’ve hit that button. You’ve hit that button That’s it. You’re in okay, so forget about that trade and move on to the next Stop trying to find a way to predict price movement. It can’t be done. Okay, concentrate on finding a way to get into the market with an edge, a risk reward target that has a chance of being profitable and let those trades just play out. Trading will drive you absolutely crazy and make you want to close early, pile in too hard and go full tilt if you keep monitoring and looking at your trades on a constant basis. You just have to accept basically that you know nothing and you have no control over where price is going to go. So hit the button, get into a trade, close that chart and move on to the next opportunity.
