The "Gambler" by Kenny Rogers is probably the most boring song ever written but every forex trader should keep a copy if only to annoy your spouse singing it. It is not a surprise that Richard Dennis of the turtles fame was looking for professional gamblers, backgammon and bridge players to train in his turtle trading system. Before the usual weekend crowd that goes to Mohegan Sun gets too excited, we are talking about those that gamble for a living not the average gambler who will surely lose his money. Professional gamblers make smart bets and do not gamble for excitement, but to make a living.
Next time you think about making a forex trade, think about what the professional gambler would do in your particular situation.
1. The Professional Will Not Chase the Market
Following a spike in the market is something that every forex trader has done sometime during his trading days. If a trading bar, goes above or below a previous trading range, that is a spike and should be avoided at all costs. A professional gambler will not chase after a pot just because it is big but will wait for the odds to be in his favor. Every time you chase a market by trading spikes and leave your forex trading plan, you are significantly reducing your chances of success.
You will find that the best forex traders always wait for a retracement to buy or sell their currency. They know that a spike is only a temporary occurrence and sooner or later, the market will cool down to allow them make entries at better prices and higher probability trade setups. Learning those fibonacci retracement numbers and pivot points will make you a much better trader and get rid of one of the worst mistakes forex traders make.
2. The Professional Gambler is Not Afraid to Lose
We all hate losing money. The only difference between the professional gambler and a losing forex trader that the losing forex trader can actually become emotionally sick if he has a losing trade. When a professional gambler makes a high odds stake and loses, he is not discouraged as he knows he had made the right bet given the circumstances. He knows that in the long run, such bets will payoff and does not sit around mopping about how the "god's" are against him.
In fact, the professional gambler will increase his bet on high percentage hands and knows how to lose. Losing and having big draw down periods are part of forex trading. One can not hide behind the best forex system in the world and expect never to lose. The good forex trader will learn that as long as he sticks to his forex system that has positive winning expectancy, the small loses that he is making will pay back as long as he sticks to his plan and is not afraid to lose a few trades.
3. The Professional Gambler Has a Game Plan
Call it a game plan or a forex trading plan, the professional is not led by his emotions to set up a forex trade. The professional gambler does not necessarily increase the size of his bets because he just doubled his money in the last hand. Following your money management plan is essential to a forex traders success. Increasing lot sizes just because you feel that you are on a roll, is a sure way to lose in the long run. A well researched and strictly followed forex trading plan coupled with a disciplined adherence to a forex money management goes a long way towards making one a great forex trader.
A professional gambler increases his bet on high percentage hands as should your forex trading plan. Knowing how much you might lose in a trade, and how much you are likely to gain in the trade is essential before you make your forex trade. It is amazing to see forex traders making a habit of not knowing their risk/reward ratios in the trades.
Do not feel shy watching re-runs of previous poker championships, you might learn "when to hold 'em, know when to fold 'em, know when to walk away, know when to run". In the end you might make a very good forex trader.
