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FX Articles Apr 2, 2006 3:51am | Post# 1

If you want to be a successful trader, you must make sure you do not deny reality in any phase of your trading. You cannot deny losses, price direction, mistakes you make, being undercapitalized, or a whole host of things you would rather not think about.

Many traders think the best way to deal with unpleasant ideas, events, or personal character flaws is to shut their eyes and pretend they donít exist.

Letís face it, trading can be difficult, at times very difficult and it's essential that you focus on reality. Denial takes your focus away from the very thing you need to be concentrating onóthe action of pricesóregardless of time frame. Your mind must be clear so that you can look at the market and see what is really there.

The way I learned to handle denial was to simply write down and confront all possible ideas I had trouble accepting. Some thoughts I could fix and others I just had to accept. But facing the truth of what and who you are is the only way to deal with denial. You have to realize that for the most part the only things you can change are in yourself. Other things you just have to accept. You have to accept the reality of slippage, for example. You have to realize that indicators often give false signals and that there is no magic moving average nor is there a magical oscillator.

You have to realize that some winning trades are just lucky trades and had nothing to do with your skill as a trader. By the same token, you will also experience the bad luck of having prices make a sudden and unexpected move against you.

Rather than wasting your time in denial, concentrate your mental energies on improving yourself and improving your trading skills. Work at improving your abilities to observe. Realize that you have to survive the markets in order to benefit from the experience of the markets.

There is really only one true problem with your tradingóthat problem is you! However, the problem manifests in two ways:

1. Market conditions have changed and you havenít.
2. You are no longer doing what you did when you were winning. You have drifted. You are not consistent.

The first aspect of the problem is due to poor observation. The market has changed and you havenít changed with it. Poor observation stems from a variety of lesser but very important problems. You have married a market, or a trade. You may have allowed your ego to get the best of you and you are no longer humble. Iíve named just a couple here. I challenge you to think about the many things that can distract you from seeing when market conditions have changed. Make a list of those things and confront them.

The second aspect of the problem stems from inconsistency. Here again, you should make a list of those things that cause you to be inconsistent.

"Perhaps I was a good trader at one time, but the market conditions have changed and I may not be able to keep my reputation up." This is an issue that all traders face at some point: keeping up their reputation. When one makes big profits trading, it's tempting to tell neighbors and friends how well you are doing. It's great when you're making the big profits, but keeping up appearances is often the downfall of even the most astute trader. Again, denying your need for fame and glory, or pretending that you can maintain an unrealistic reputation, will use up your psychological energy and interfere with your ability to concentrate. Huge profits tend to go to the humble, so try not to build up your reputation. Admit that you will have difficulty keeping up appearances and just quit doing it.

One fact that traders wrestle with continuously is the notion that, "Trading is not a legitimate job." Many traders struggle with the legitimacy of trading. Some traders find that they can simply remind themselves, "Trading provides liquidity and helps control prices." Other traders, however, think this isn't good enough and need to find more meaning in their daily trading activities. For example, they may focus on how trading helps them provide for their family, or may plan to donate some of their profits to charities they view as personally valuable. The point is, don't deny the possible truth to such ideas. You will be better off acknowledging and working through them, and then just moving on. Denying they exist, on the other hand, will use up time and energy.

Unacceptable beliefs tend to lie in the back of your mind. They remain there, lurking, and when you are vulnerable, they can powerfully influence your outlook. So acknowledge unacceptable ideas, and once you admit the possible validity of such ideas, you will neutralize their potential influence. This will free up limited psychological resources, allowing you to focus all your energy on trading profitably and consistently.

Joe Ross, trader, author, trading educator is one of the most eclectic traders in the business. His 48+ years include position trading of shares, and futures. He daytrades stock indices, currencies, and forex. He trades futures spreads and options on futures, and has written books about it all - 12 to be exact. Joe is the discoverer of The Law of Chartsô, and is famous for the Ross hookô and the Traders Trick Entryô.

eastmaels Apr 2, 2006 10:47am | Post# 2

My Opinion
You have to realize that some winning trades are just lucky trades and had nothing to do with your skill as a trader.
I need to remember this one..

It's also good to know that what I'm currently doing is being done by a professional trader such as Joe Ross. Which is being in constant observation..
1. Market conditions have changed and you havenít.
I've often heard this phrase a lot of times. "Market conditions may have changed."
What are these market conditions that one should look out for?
Because right now, I have no clear idea of what these conditions are..
The best that I could come up with is that these conditions are "up trend", "consolidate", "down trend".
Other than those, I have no idea what they talk about these conditions.
Maybe basically because I still don't have enough screen time.

So hopefully someone could give me an answer?


Thanks Mr. Editor for the new article..

Profitsee Apr 2, 2006 11:31am | Post# 3

Coughing up losses HURTS
One of my biggest problems is waiting for small losses to turn around, telling myself its just noise. Then when those losses accumulate to large losses, its too late. I get my arse kicked!

mrgreen Apr 2, 2006 5:36pm | Post# 4

hope's whispers.
One of my biggest problems is waiting for small losses to turn around, telling myself its just noise. Then when those losses accumulate to large losses, its too late. I get my arse kicked!
This reminds me of the some lines from ROASO. Edwin LeFevre really captured the essence of what happens when one "listens to hope's whispers"

"Things got worse and worse. Finally there came the awful day of reckoning for the bulls and the optimists and the wishful thinkers and those vast hordes that, dreading the pain of a small loss at the beginning, were now about to suffer total amputation -- without anaesthetics. A day I shall never forget, October 24, 1907."

And, I love this one:

"Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit."

ROASO is an awesome book. I recommend the audio version, I listen to it every day.

Profitsee Apr 8, 2006 10:51am | Post# 5

Your signature "The Harder I work, the luckier I get" is CLASSIC ! Its encompasses the pervasive surprises when I trade these markets.

ericnyamu Sep 21, 2014 3:58pm | Post# 6

Donít Deny Reality, by Joe Ross is just trading what you see not what you want to see.get out your mt4 charts with no indicators no nothing on the currency you trade just a naked chart what do you see. then TRADE IT

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