The psychology of trade profit targets
Learning how to close trades at the most positive price level is as important as entering trade rightly. Yes, because what determines your overall profits and loss in the forex market are these two conditions, your entry time or exit. This article explains the psychology of profit targets and the odds of winning or losing on every single trade.
Every trade has an arbitrary result
When you trade forex, you should know that the result of each trade is almost entirely random. Even expert traders at investment banks have a success rate of roughly above 50 percent. This implies that you don’t know what the result of a trade would be. It can equally be a winning or losing trade.
Despite that every trade has a random outcome; traders can gain an edge with a big enough sample size by taking high-probability trades and using stringent risk management tactics. This knowledge is possibly the largest difficulties traders face when considering their profit targets.
You can’t be sure of winning a particular trade even if the previous trade was successful. Having said that in the end traders commonly make winning trades by fully understanding the following key trading factors:
You can make a winning trade in the market by maintaining a high-probability trading strategy after a long period and with a big enough trade sample size.
Next, you need to understand that every trade you make has the chance of being either a winning or losing trade and you practically cannot control what the outcome would be.
Anticipation is the greatest impediment to your trading success
As soon as you completely understand that each trade has an entirely random outcome and that you can’t control what the trade outcome would be, it would be much easier to accept losses and you will avoid having undue anticipation about the result of a particular trade. As soon as you fully understand this fact, you would immediately free your heart from overly worrying about making winning trades.
The best profit targets and trade exits approach
The best approach to trade profit targets and trade exits given the fact that the result of each trade is random and that you can’t control what the outcome would be is to develop an efficient trading strategy with the potential of having a positive outcome over a specific number of trades. Price action trading strategies and trading strategies that are centered on long-term trades’ fundamental analysis normally yield potential good outcomes if they are done rightly. However, even if you don’t follow these trading strategies, you need to follow your exit and entry rules constantly to have the chances of making more winning trades.
After you have entered your trade, set the Stop Loss and Take Profit targets, don’t interfere with the position. Just watch what the outcome would be. This strategy is termed “set and forget”.