Lesson Four: Detachment

"The Master stays behind;
that is why she is ahead.
She is detached from all things;
that is why she is one with them.
Because she has let go of herself,
she is perfectly fulfilled."

Detachment is an important concept from Taoism that can easily be applied to trading the Forex market. A good trader should be detached from greed, emotion, as well as any preconceived notion on trend direction. Let's examine this last issue on trend direction a bit closer.

Having a preconceived idea about which way a currency pair is headed is quite dangerous in my opinion. I have seen many traders become 100% convinced that a pair was going to continue heading South, simply because that is the direction the pair had been heading for the last 5 days. This is showing attachment. The trader has become attached to trading Short, perhaps because they have made some easy pips by following the current downtrend.

It is important for traders of every market to be focused in the present moment; detached from what Price has done in previous trading sessions and focused on what it is doing at the moment. Obviously we want to use the past as clues to the future through technical analysis, but the key word here is "clues". We should not be so focused on the past that we forget about the present. Far too many times I see traders in the forums become attached to a trend, even to the point where they will use enormous stop loss levels, no stop loss, or continue moving their stop loss level further and further away in hopes that the trend will reverse and continue in the direction they desire.

Be detached in your trading and your profits will increase. Find the flow and truly see the market instead of injecting your preconceived notions upon it. Most people live a little bit in the present or the past. They worry about what they should have done and they worry about what they are going to do next. When you learn to find the flow you stop fighting yourself and things come much more naturally. You are finally living in the present. This takes practice and hard work...but it does pay off!

As always, happy trading!