Do You Want To Be Right or To Make Money?

Again, here is a great article by Russ Horn...

In this article, he talks about a traders mentality and why many traders are no making it in forex.

It is because they want to proof that they are right.

But in the end, being right does not mean we will make money.

he explains it in the article...

here you go...

"Do you want to be right, or do you want to make money"
What Does That Mean?

Every once in a while you will hear traders make a comment along the lines of "do you want to be right or do you want to make money".

This phrase has a lot of novice traders scratching their heads, and dare I say, many pro traders as well. On the surface, this comment makes no sense at all. In order to make money, don't you have to be right?

Yes, you do. You can't make any money being wrong all the time.
But there is more to this story than that.

In order to make money in the markets, you will have to get a certain number of your trades right, this goes without saying. To be more accurate, you will need to get a certain number of winning trades.

Let's break the comment down and look at each part:

1. Do you want to be right

There is a lot of emotion in trading. Trading brings out emotions in traders that they didn't even know they had. One of these emotions is the need to be correct.

Of course, in order to earn your money in trading, you have to occasionally be right and the trades have to go in your direction. However, traders that HAVE to be right, either because of pride or because they simply don't want to take a loss, will do bad things in order prove that they are right.

This will include:
- moving stop losses
- removing stop losses
- adding to losing positions
- allowing a losing trade to get larger and larger
- believing signals in the opposite direction are fake signals
- attempting to validate their losing position on higher timeframes

The worst thing about this behavior is sometimes it pays off. If they can hold onto a losing trade long enough, it will eventually turn around and they will close the trade in profit, proving to the world that they were right.

What will happen, sooner than you like, is that losing trade simply never comes back. It will go so far in the wrong direction that the trader will have to either close the trade because they are so far down that they can no longer bear any further losses, or they get a margin call and the trade is closed automatically.

Having to prove that you are right is going to eventually backfire and it will hit your account so hard that recovery may be impossible.

2. Do you want to make money

Traders that follow their rules and take their per-determined losses will ultimately make money. Winning isn't what's important, it's the fact they follow the rules and focus on the process that will make them money.

Traders that make money are only going to be right a certain percentage of the time. It can range from 30 - 70% of the time. Being right isn't what trading is about, it's keeping your losses small and your winners bigger is what trading is about.

Traders who make money don't have their egos invested in every trade they take. Their egos are better invested in the fact that can follow and implement the process, they are fully aware that taking small losses is part of the process.

Soooooo... do you want to be an emotionally guided trader who wants to win every trade to prove your worth and skills to the world, or do you want to be a systematic trader who makes a ton of money?

Show me a trader who is always right and I will show you a trader who doesn't make any money.

happy trading,

Yours sincerely,




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