Most of what is needed for
the successful trading of Foreign Exchange will be found on the OmiCronFX
website, in our books, in the commentary that we publish each weekday morning,
and in the patterns of operation of our algorithmic routines. This material
represents the accumulation of knowledge and experience over a considerable
period of time. Much of it comes from what might be called “screen-time”,
whether that is spent actually trading, in research or in the development of
the software.
There are other influencers,
however. Most of these take the form of books. While many are directly related
to Forex, general trading, economics or similar, some of them are not. One of
the most important of these is “Zen and the Art of Motorcycle Maintenance”, by
Robert M. Pirsig.
Your blogger first read the
book just after it was written, in 1974. It had a profound effect then, but was
appreciated to an even greater extent when it was re-absorbed on the occasion
of its 25th anniversary, a few years ago. Now it is being read
again.
Pirsig’s book exists on three
levels. It is a treatise on doing things right, without the stresses that
perfectionism often gives rise to, it is an account of mental disorder of the
kind that can be brought about by a split personality, otherwise often
described as schizophrenia, and it is a straightforward, well-written tale of a
motorcycle trip through the American Mid-West.
Peace of mind and Forex trading
The book’s relevance to Forex
trading can be summed up in one anecdote by the narrator, who is by profession
the writer of technical manuals. He tells his audience of friends, but
including his son, that he held on to a manual he had received many years
previously that began with the sentence: “Assembly of Japanese bicycle require
great peace of mind”. He did this because he realised that this sentence got to
the very core of any instruction on how to do anything - worries and stress
were always going to be built into
whatever it was the person concerned was trying to achieve, while being able to
operate with tranquility and ease would have the beneficial opposite effect.
If anything is needed for
successful Forex trading, it is this same great peace of mind. Aspiring traders
have often been told this, or similar, so readers are probably nodding at this
stage. But the exhortation goes far beyond the obvious requirements of making
sure that you are in harmony with the people with whom you live and work and
that you have dealt with all potential sources of worry in your personal life.
Of particular importance is
the requirement that peace of mind extends to the very trading that you carry
out. This means only taking on positions that conform with the need to have probability
on your side, which also means that you must think in terms of numbers of
trades, but without over-trading; it means locking in profits as a matter of
principle, even though this may happen on occasion too early in the trade –
remember that you will be dealing with numbers of trades so the ones that
disappoint will be more than offset by the ones that turn around and go in the
other direction soon after the profit was taken; it means diversification in
Forex pairs; it means taking on position sizes that are safe and manageable; it
means using Stop Loss orders as a safety net; it means ruthlessly cutting, which will also mean taking, losses when the criteria for profit no longer exist according to your
strategy; and it means extensive research into the fundamentals and the careful
study of price action, among many other things.
It
should hardly need saying that it also means actually having a strategy, and
sticking to it. In the case of OmiCronFX, essential elements of the strategy
are built into the algorithmic “power tools” that we use. And this is the real
strength of our algorithmic routines. They are not robots, that can be switched
on and left unattended - such solutions will never exist. However, they do a
great job in ensuring that the correct discipline is maintained so that the
strategy is followed. Computers and software simply do not experience, and
therefore cannot react to, the emotions of fear, greed, elation and
disappointment that play havoc with so many trading accounts.
A full reading of “Zen and
the Art of Motorcycle Maintenance” is also recommended. As already noted, it is
a celebration of taking the time to ensure that you get into the rhythm of
whatever it is you are doing, and by this means do it right.
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