How to Cope with Pre- and Post-Trading Stress Disorders
Trading forex is not easy. In fact, it can be downright difficult at times. This is not due to charts or indicators. Mastering fundamental and technical analysis will help, but they are not the keys to success. Why not? In a word: humanity.
Forex is not about red candles and green candles. It’s about the traders who are creating them. Their greed and fear are represented by the colors on your charts. That means there are times that logic simply fails.
This makes forex a challenge to master. Recently, during a trip to Tokyo, after my presentation to a group of forex traders, I hung out with a couple of the attendees. One of them was an astrophysicist who had become a banker. As vice president of the bank, he had only one task: build a computer that will help the bank’s traders make trading decisions. Fun job, eh? I bet it pays better than NASA!
In any case, after a few pints of Guinness (isn’t it amazing that you can find an Irish pub in virtually every city on the planet?) we discussed his progress building a virtual trader for the bank. This is a summarized version of the conversation.
“How does it work for equities?” I asked.
“How does it work for bonds?”
“How about currencies?”
“Can’t be done.”
“The market is too liquid, too efficient, and often too volatile. We simply can’t model the market. Sometimes the system works great. Other times, not ...