"A person who blames others has not begun their lesson. A person who blames themselves has begun their lesson. A person who blames no one has finished their lesson."
Blame is a fascinating concept, it's best described as a feeling or a belief that someone, or something is responsible for a fault or wrong. There's a tendency when we're losing at trading, for us to quickly apportion blame, rather than introspectively analyse our trading plan and methods.
We'll blame the markets, perhaps insisting that "they're rigged". We'll blame the platform we use, "it's too slow, too clunky, the fills are inaccurate". We'll ultimately blame our broker, "the spreads are too wide, the commissions too high, the service is poor". Generally, at the very back of the blame queue, is any admission that our own poor performance is leading to avoidable mistakes. One of the first challenges we face, on the journey to becoming a fully developed trader, is taking control of our trading, by taking ownership of our mistakes and decisions.
Before we deal with the "everyone is against me" claims, it's worth applying some logic and percentages to the claims, by using some basic industry averages. The average spread being quoted, on a EUR/USD trade with an STP/ECN broker, is currently less than one pip. Slippage only occurs on a small percentage of trades and some slippage can be positive; you are just as likely to experience positive slippage as negative. Therefore, when measured over a significant sample of trades, slippage is neutralised. Moreover, if you employ a broker who uses straight through processing, into an electronic configured network, then you couldn't possibly find a more efficient and equitable method to trade the FX markets.
Taking all the afore mentioned factors into consideration, what reasonable assumption could we reach to determine the effects on our trading? Could the various inconsistencies and variables cause us a 2% annual reduction in our overall profitability? Is that an acceptable price of doing business in our FX trading business? If we do calculate that the reduction in our bottom line is limited to such a small figure, then we must be honest with ourselves; it's not enough of a dent in our profit margin to significantly alter the ambitions and objectives we originally set for ourselves. Further, with some diligence, investigation and application, we could reduce our 'profitability impact' to perhaps one percent, a statistically negligible sum.
The market is not rigged, no single body, or entity can possibly exercise control over the FX market, with its estimated turnover of circa $4.3 trillion each trading day. As for the other issues we've listed, there are some simple steps which individual traders can take, in order to ensure they're trading in the fairest, most transparent and ethical methods available.
Firstly, only trade FX through an STP/ECN broker. In that way you're trading in as professional a manner as a retail trader possibly could. You're accessing a liquid pool of live quotes delivered by institutional level participants. The trading is transparent and in effect anonymous. STP/ECN brokers are on your side, they charge an extremely small levy for each trade made. They don't trade against you, they want you to win. Their long term success is dependent on traders such as you, staying with them as loyal and successful clients.
Secondly, use a platform that's been thoroughly tested, through rigorous and testing market conditions over many years. Use a platform that you can adapt to your preferences, a platform on which you can set all your personal trading parameters. One where you can perhaps create an expert advisor, to automatically enter and exit the market on your behalf.
Applying these two conditions to your trading; STP/ECN whilst utilising a state of the art platform, ensures that blame, in terms of inefficiencies, is reduced to the statistically negligible issue previously mentioned. Once blame and suspicion is eradicated, we can concentrate on the real issues that may be holding our trading back and your broker will be only too delighted to speak to you on that very subject.
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