The majority of traders who enter into the world of Forex, pay no attention to what can go wrong, only how much money they can make. Bad Move...
One of the main reasons why most people get into trading, is the financial independence that can be achieved. You see it being advertised everywhere:
"HOW I MADE $50,000 IN A WEEK"
" I MADE $3500 IN ONLY 5 MINUTES, FIND OUT HOW"
The Average Joe, will look at statements like the above and automatically want to find out more. I won't deny it, i too was sucked into this marketing tool, i joined signal companies that promised me results, i paid for systems/indicators. I have also had my fair share of "system hopping".
So, What's the Right Way?
There is no "right way" that will guarantee success, but there is the right way that any trader starting out can apply to guide them and set them up for success in the markets.
In life, you will only get out what you put in. (Very powerful statement that is underestimated). Problem is, new traders fail to realise that an element of dedication to learning How The Market Works is more important than working out when you can finish your day job so you can trade full time. Once you have an understanding of how the market works, then you explore the psychological aspects of trading and how they relate to the way the market works. I can appreciate if this is somewhat confusing but read further.
The Lesson I Learned In London...
Lets take it back to the year 2005, on my quest for knowledge on the world of financial markets. I had subscribed to a newsletter and i received an email about seminars/events that were being held in England. As a aspiring trader, i wanted to attend seminars so that i may experience the opportunity to speak to professional traders about the markets.
You could imagine the excitement i felt when i had managed to reserve a seat for the seminar. The Event was to be held in London, South Kensington, at the London Olympia.
The two weeks before the seminar, i compiled up a list of questions that i would ask these traders. Questions like:
"How long did it take you to make money consistently"
" How much did you start with and what indicators should i use"
"What is the best market to trade".
I was pumped up. i convinced myself that i would walk out of the seminar with a strategy that i could use to trade the markets. Man, i don't think i had ever bulshitted myself so much in my life.
"You can Purchase this System for £2999"
Once i arrived at the seminar, i took my seat, pen and paper and was ready to absorb every word that came out of these professional traders mouths.
After 5 hours, i had wrote about 4 various courses that i could attend and how much they cost.
I thought to myself, this seminar has really been about these professionals, selling their courses on how to trade. I felt i had wasted so much time, i had the expectation that i would be communicating with traders, but it was far from that. Myself and the other 200 guys had sat there, in a lecture theater and were given course options. WHAT THE F***K
I was ready to leave, there was 30 minutes left, however there was one more trader to speak. i thought to myself: "this guy is probably going to sell another course for £3000, fuck it, i may as well listen to what he has to say"
For the first 5 minutes, this trader had spoke about the system he uses to trade. He spoke about the markets you could trade in, what the ideal cash balance you would need to get the most out of the system. Then...The next few sentences that came out of his mouth changed the course of my trading career. I will never forget what he said:
"Now what i am about to say to you is counter - productive. But if you really want to learn how to trade, READ READ READ READ and then, READ. Don't Buy My Course. Before i focused on making any money, i needed to know what i was doing, if you don't have the time to learn you can pay me £2999 and i can give you the short cut., but i advise you learn about the markets, markets change all the time, systems have to adapt to the changes. Some will, Some won't"
I paused for a moment and looked around. Hardly any of the guys sitting near me appeared to realise what this guy had said. All they truly cared about was how soon could they buy this guys course. This trader gave me the key to understanding what i needed to do. I realised that had this guy not spoke, i would have either purchased a course, or enroll on to more seminars, hoping i will find the right course for me.
If there is anything you can take from this post, let it be this. You will most probably fail in any en-devour in life if you fail to educate yourself in your chosen field. Don't take short cuts, that's for the lazy. Livermore stated it clearly:
“The game of speculation is the most uniformly fascinating game in the world. But its is not a game for the stupid, the MENTALLY LAZY, the person of inferior emotional balance, or the get -rich-quick adventurer. They will die poor.”
Train Your Mind
The Forex market is not one to be dismissed. It will crush you, it will break you, build you up, and shatter you, IF, and ONLY IF, you DON'T take the necessary steps to educating yourself. Now i do understand that the internet has a lot of stuff on how to trade the markets, but whatever system you use, unless you address the mental game of trading, then you will fall into the category of traders that fail, and that number is closing in on 100% (well its 99.99% because there is a minority that make money).
The way to approach trading is to make sure you are aware of the psychological traps that can creep into your trading that make you develop bad habits. Experience will show you this, but you wont know what bad habits you have if you fail to recognise that you have bad habits at all.
Do not " System Hop". Find a method that suits your personality, stick with it, give it a chance, learn to build your personality around your system so that you can trade in sync with it. As Mother says: "Do Not Be A Jack Of All trades And Master Of None"
Trading is a fantastic business to be in, If its just for money, i will tell you now, you will pay a lot more in losses. There has to be a passion, you have to live and breathe trading. It somewhat has to become an obsession, an obsession to learn how the market works and how to train your mind to be ready to handle the challenges that trading introduces.