Why You Lose Money Even Though You Know What Price Is Going To Do

How often has this happened to you that you somehow knew what price was going to do, but you still ended up losing money even though your analysis was correct? I know because I have been there and it’s the worst feeling.

In this article, I help you understand this topic on a new level so that you can start making better trading decisions.

My USD/CHF trade – why I made money and you lost

I traded the USD/CHF long profitably this week and it was a classic amateur trap. We see this GREAT support there and it seems obvious to buy, right? And in hindsight, it looks like an easy profit too. But in reality, most traders lost money on this good setup. Why?

Because, when we look closer, it wasn’t that easy after all. Most probably missed the first pinbar at the previous swing high and then were frustrated to see price take off without them. Then the next time, they jumped in early, driven by FOMO, and ready to make up for the missed opportunity. But then the squeeze happened and price spiked perfectly to your stop loss. How could this be? Did your broker hunt your stop? NO! It was just too obvious and you were following the crowd. You were taking the same FOMO-driven trade every losing trader was taking.

When a setup is too obvious, it is usually hard to trade and you have to step back and think how every other trader will approach this. Then you wait for the shakeout and get your chance later, when the big boys are in.

Easy money on the GBP/JPY – another amateur failure

The Head & Shoulders on the GBPJPY was amazing and I profited from it this week too. But why was it so hard to trade in real time and why does this always happen to you? You see a good setup, you can feel where price is going and then you still end up losing money?

The Head & Shoulders was obvious but it wasn’t easy to trade. It looked a few times as if price was breaking out but the neckline always held. The amateur will just jump in because he is scared to miss yet another move. I know, I have been there. Over the years, I have learned that you NEVER miss moves in trading – the real problem is believing that you’re going to miss moves. You then take the first false and premature signal, lose money and then give up when the real signal comes and miss out.

There is no need to make this longer than it has to be. Once you can internalize this message, you’ll start seeing charts differently. Understand that you won’t miss moves and that waiting pays off.

Start seeing the charts from an amateur perspective and understand what the average loser is going to do in order for you to avoid that.