One of the first thing I did realize when getting started with Forex trading, is the brutal chart transformation when jumping from one timeframe to another.
Although logical (charts are just market representations through different time lenses), I was stunned that 2 people looking at different timeframes for a same pair can come up with 2 totally different conclusions!
On top of that, the amount of information we choose to use when trading also have a direct impact on our decisions. So, even presented with the same exact graph, using the same exact timeframe, can your conclusion be totally different from someone else.
And because strategies might be so different, even if you had the exact same tools, the exact same timeframe and the exact same pair as someone else, your strategies might just be opposite.
4 ways you influence your trading
This is not it! I forgot to mention that you are part of your system.
Indeed, you interact with it and, ultimately, do take the final decisions. You therefore also have a direct influence on your trading.
But often in ways you don’t even realize…
1. Your level of trust
The more you trust your system, the greater the chances for you to stick with it.
If you start off with a new system thinking “I’ll see how it goes” you might as well stop right off the bat.
You might then wonder how you could trust a system if you’ve never used it before?
What about having some back-tested data SHOWING you the system would have been successful in the past? Wouldn’t it help build trust?
2. Your expectations
Let’s say we both use the same exact system. However, I am aiming for 15 pips a day, while you are targeting 150!
Even if we would both make about 30 pips a day with this system, our view would be completely different…
For me, the system is wonderful, I am doing twice more as I planned to do.
For you, it is sh** as you are making 5 times less than expected!
3. Your beliefs system
Do you believe in technical analysis? Or are you more like a fundamental trader?
Different people have different beliefs. And you will never be able to trade a system (no matter how great it is) as long as you don’t trust the principles it is based on.
Because you’ll always explain your losses by the “facts” (which really just are “your facts”) that these principles are wrong. You will therefore believe there is nothing you can do to make it work.
And you will never make it work!
It is essential for you to trade a system which fits your beliefs system…
4. Your mood
On top of all these 3 factors, your mood has a massive influence on yourself and your trading.
Have you noticed that when you’re having a bad day, everything seems worst than it usually is?
Would you react the same after losing a $100 note if you were already struggling to make ends meet compared to if you had just won $5000 at the lottery?
I certainly wouldn’t!
Of all 4, your mood probably has the greatest influence on your trading decisions.
To become a great trader, you have to understand you are part of your system.
Furthermore, you are greatly influencing the outcome of your trading with your inputs, often without realizing it!
Staying aware of your own multiple influences on your trading helps you understand where you have to improve and what you have to do in order to really make the system work!