The short answer to the above question is; not always.
This question and its honest answer bring to light a part of Forex trading that is often overlooked.
The fact that not all market analysts make good traders proves that there is more to trading than just getting the numbers right.
How can market analysts and experts fail?
It is one thing to understand market moves and predict them correctly and another to trade profitably. This might sound confusing to many new traders but there is a reason for this.
You see trading is not just about knowing the market. Had it been that simple and mathematical, such a high number of traders would not have failed.
There is more to trading such as:
- Emotional stability
Knowledge about the market is no doubt very important and in fact at the top of all these things. However, knowledge alone cannot make you a successful trader. The factors mentioned above have to accompany knowledge in order for a trader to become successful.
There is no guarantee that someone who has a good understanding of the currency market is also a very disciplined individual who can separate emotions from financial decisions.
The other thing that may lead to a market analyst’s downfall as a trader is overconfidence. Psychological aspects play a major role in one’s performance as a trader.
Thinking that you know what way the market is going to move and being confident about your judgment to a fault, may lead to overconfidence. The thing about the currency market is that too much confidence often doesn’t pan out.
Too much confidence can lead to greed and stubbornness
These are the most harmful emotions in Forex trading.
No one can fully know what direction the market is going to take. Even when we make our best guess or prediction, it is only that: a guess. The market often surprises even the best of market experts.
When you are basing your moves on your own analysis, it is possible to get too involved until it gets to the point that you don’t want to be proven wrong.
It is a very common human trait. We don’t like being wrong. Therefore, it is easy for a market analyst to get in the mindset where they are just trying to prove a point.
Having said all that, if an individual is not consistent enough or can’t manage to separate themselves psychologically or emotionally from their trades;
Should it affect their credibility?
No, it should not.
There are two sides to trading. There is the knowledge aspect and then there is the psychological aspect to it.
Just because they haven’t got the latter down does not mean the former should be disregarded too.
Someone who has been analyzing the markets for a long time and has a good understanding of how one thing affects another can easily share that information and without any qualms.
The psychological aspect of trading and the trading temperament is the trader’s own responsibility. No one else can do that for you. So, someone else’s inability shouldn’t affect you.
In conclusion, market analysts are after all only human too and so have their own challenges to overcome. It does not, however, discredit them as analysts.
We hope this made sense and that this will have answered the question that a lot of traders ask about why supposed market experts and analysts tell others what’s good and what’s not but don’t participate themselves.