Sex, Lies and Forex Trading

That heading caught your attention. I do actually think that the fairer sex can be better traders than men for many reasons - but thats not what I wanted to discuss. Instead I just want to share some of my own opinions on various Forex related topics - including many of the links and comments that have come to light in the Forex Street chat room.

The first one is learning this trade or craft - ie to learn how to trade Forex profitably. Like anything in life - its takes time, training and effort etc. There is an excellent video about how it can take up to 10,000 hours to get there and to be fully competent. That is a long time and although many are competent within 2 years - the normal time for a serious retail trader is 5-10 years.

Think about it - in one year working at forex watching the charts and studying and learning- if you spent 40 hrs a week for 47 weeks ( allowing for holidays etc ) that would be only 1880 hours. So if you are only part time and work say 15 hours a week on Forex - it will take you really over 12 years to have completed your 10,000 hours. Just back testing and looking at 30 years of past data - can help - but you are kidding yourself if you think that really counts.- especially with whats happened in the last 3 years and how the forex market as changed - and will change even more again.

However - I will say it is easier to learn now - because many of the past lies, unscupulous brokers and con artist myths have been exposed and therefore I think it is easier to access and learn through proper training quicker than it was when I started in 2003 / 4.

My next myth put out is connected to trading methods and stop sizes etc. I have been asked count less time in the chat room - why is your daily target so low - and why are you happy with a 10 or 15 pip profitable trade - instead of aiming for a 200 pip trade??

I cannot due justice to my answer in the chat room - but here I will try and explain more. Orginally before I started my business life - I obtained Honours Degree in Economics and then trained to become an Accountant. My accountancy back ground lead me into a successful business career - prior to finding Forex trading . As we know Economics is not black and white - but Accountancy certainly is. Basic Accounting shows you have to earn more than you spend and in a normal job you are paid by the Hour. - so if you work say 50 hours a week - you will earn more than 30 hours a week.

Now in Forex trading - this is completely forgotten - and the myth is you judge it as an investor - and therefore as long asyou make money every year - that's great !!!. Total Rubbish - Commercial Investing is totally different to retail trading - its chalk and cheese. So if I had £1 million in investments and made 10% per annum i would be happy - even if i had a few negative months. But If I have got £20k and spend time trading - 10% per annum is not enough..

Therefore if you put say 2% of your capital in a trade and you are after say 4or 5% return - you want that ideally to be completed within ideally 30 minutes - not 2 days. Thats a waste of time effort and money. This is why all the big players are HF trading - because the accountants have proved to them its the quickest way to make money.

Therefore for me a 15pip target with a 5 pip hidden stop - or normal traders say a 20 pip stop with a 50 pip target at 2% capital is far better than a 250 pip target with 100 pip stop and same 2% stake.

The main reasons are that the first trade can happen in under 15 minutes - when you know what you are doing - the next one can take say 2 hrs and then the final one with the 100 pip stop takes anything from 1 - 3+ days - inefficient and time consuming . In fact some traders actually think it is easier to get 250 pips than 15 pips !!!! - Can you believe it - do they ever look at a chart ??

I appreciate on smaller funds and less time available the reasons to longer term trade - but any one serious should start doing some simple figures and work out their hourly or daily returns are.

Stops are needed ( unless you have a valid alternative) but this is another myth - The market makers and the forex scammers want you to have then large - ie over 50 pips and ideally 75 to 125 pips - because then you dont lose so much - and yes when you do - you lose more. Its just time inefficient and who wants to spend 2-5 hrs in a trade not working? - not me in day trading.

Please dont think I am wanting all traders to become short term with 10 pip stops and 25-30 pip targets with 70% + success rates and doing 5 + trades a day.. If they were experienced enough to do it with 2% on each trade and compounded every month they would be very successful.

Next myth - losing - Which is the best alternative - To lose 2% of your capital in a 15 pip stop in 30 minutes or to lose the same 2% in 100 pip stop after say 5 hours ????

There both losses- nobody likes it - but part of trading - but the first one is time efficient and enables you to do another 2 -4 successful trades - whilst the other one is "psychoing"you out and taking your mind away from your next trade.

So - get your mindset right - lose - you are bound to - but lose quickly and move on . The extra spread of 2- 4 pips paying to get back in a trade is still cheaper than having your stop 20 pips bigger - and still losing.

Finally short term trading done properly is far more time efficient - than putting your trades on and walking away and then getting your results after you have been asleep.. Nobody in the industry would say that - because it destroys another myth of getting rich whilst you are doing nothing.

So ideally do both.

Look forward to the comments both good and against - lets explore these and other myths we are all fed.

9 members like this

Comment by majimaji on October 1, 2011 at 3:47pm: Nice read peter. Thanks

Comment by majimaji on October 1, 2011 at 3:47pm: Nice read peter. Thanks

Comment by genxtrader on October 1, 2011 at 5:24pm: hi peter, i think this is a good subject because im sure there are alot of traders trying to figure out what their style of trade is, i think it is in what you see, if you study the charts long enough eventually you will see something, when you see it, thats what you trade.,whether you gann,fib,pivot,ma,fractal,linear regress,pattern recognize,trend,swing or scalp. when you find something that you see over and over again thats where you begin to build a strat,and figure out how to maximize profits from that strat, the turtles built their wealth trading in one direction,a friend of mine turned 7k into 300k in 2.5 yrs trading 2 point mean reversion on criteria that only gives him 3 to 5 trades a month,another friend of mine owns an estate planning business with 10s of mill in equity and assets under mgmt and only invests in long term,and finally someone else i know is a very successful hedge fund trader on wall street,and yes,he is is a scalper. so which way is better? i think that depends on who you are,and what your personality make up is,and finally what is it that you see.

Comment by Santosh Tiwari on October 1, 2011 at 6:21pm: Excellent post Peter , My personal experience is quite similar to some of the things mentioned in you post. started trading in 2008 , went from 25k Investment to 400 K in 3 months . started experimenting with platforms and strategies and lost a lot. The main difference , At first used to trade with small take profits and at least 20 trades in a day. Started leaving them long with attempts to predict trend and for a while, was completely lost at what the F is happening to me ?

Now trade with two accounts , one managed by me and other by my life partner and happy to say that she still beats me fair and square by her conservative decision making a better ability to stick to a plan than my flights in between to try out new things/pairs/strats/analysts. There is your fair sex advantage .

The common thing we both stick to is don't hope for a 100 pip profit on each of your trades but it is much more possible to reach 100 pips in a day for having 10 trades for 10 each . and it has worked out for last 14 months.

Comment by Peter jcp on October 1, 2011 at 6:38pm: Hi Gene & Lisa - thank you for your interesting comments and contributions. I think we would all agree humans are all different in make up - and we all have good qualities and likewise we all have some bad features we dont admit too or dont even know we have.

Too answer Lisa's points - I agree with you on many - but I do think you have been easily taken in with all the B S in this industry.

You certainly dont have to be Einstein or have an IQ of over 150 to trade successfully. But its pure sales talk when they say anybody can do it. For example there are actually some very rich millionaires who are successful who cannot read or write (( yes less than 2%) but there also some highly intelligent well educated people who fail in all walks of life ( yet again a small percentage.). But the "market" want to pull in loads of normal people into trading knowing only a small percentage will make it.

For example it can be said the traders who have the most difficulty and lose etc - are highly competitive sportsman or businessman . They cannot stand losing, hate being wrong and also fail to adjust.They think they know more etc etc- and will not spend the time really adapting and starting from scratch to get there. Trading is just a tool to make more money and I agree Lisa you need to like it and enjoy its challanges.

The most succesful traders are people who are willing to change, adapt,and willing to learn and know that this market is always more powerful than you. However - it is not a level playing field as people who can adjust their learning and mindset to a different setting can be very successful - others whether super clever or cannot even add up will fail. You succeed Lisa because you have some of the right qualities and are prepared to change to make yourself even more successful

However please dont be taken in by so much that is churned out and "sold" into our minds . I certainly got taken in with some of the B S because I am normal and like most people want to believe things I like - and then later I find out they are not true.

As Gene says there are so many different ways to trade and be successful whether HF scalping short term, swing , long term and investing for 10 years ahead. I am trying to do all rather than be "pidgeon holed" and even though my methods can clash there are simple ways to encompass them. We can all see this last week some of the FX street experts have been up to 800 pips out the wrong way on the EU - but they still might be happy and eventually make profit in the future. If its within a month or so no problem - if its 3 years or never - not so good (lol)

So "horses for courses" method - find the way you like - but be analytical and get the balance to achieve the results you want. Remember if Jesse and many other great traders were still alive they would be using EA's etc as they would adapt to "now" . The past is only a base for the future - learn from it - but develop it further

Finally I understand there are over 5400 members in FX Street etc. Lets say 20% are full time and out of those say 1000 member - 5% ( 50) are super successful traders making over 40% returns per month consistently on accounts under say $100k capital. I wonder who they are ? - Remember that is still only 2% per day - but every day - and yes it can be done. Why is it the Banks and hedge funds are telling us they only achieve 2-5% net per month - and who do you believe.???

Comment by Peter jcp on October 1, 2011 at 6:48pm: Sorry Santosh - just seen your post after I put a reply to Lisa and Gene.

Well done for achieving what have achieved and also be prepared to share your experience. Also I admire you admitting that your life partner is a better trader. Most men would hate to admit it - but I like you know we all have our strenghts and weaknesses and I am sure you know your partners - and your partner know yours. Keep it up and I wish you both continued success.

Comment by LineChart on October 1, 2011 at 8:17pm: i agree, it seems flexibility is typically female, so they should be more able to sell or buy
most people like to buy, they think the "market" as in "stock market"

then add leverage to the picture and most people will lose
up good, down bad

long good, short bad

invest good, sell bad

so

if you are a bull you may want to use 2 opposing currency pairs, so that you will see more entries

and maybe get 2 nano brokers, 1 pair per broker

deposit 100 in each

and start trading

see how you feel about it

the myth to me is

"trade the demo"

if you cannot manage 200

you can not manage 2000000

you need to get in touch with the feelings of real loss

even if it is only a dollar

if you lose 200 and still think you

please no offence Peter to about your prerequisite for making a profit in fx

but i agree with Lisa about intelligent/knowledgeable people being losing traders

i think mindset is bigger factor,

as Lisa said it is the whole gamete of a persons relationship to the world

and the market provides the opportunity to have drama

good trading is boring

80% of the time the market is quiet

i think scalpers have more instant access to self sabotage

swing trading does make a bunch of pips for me with wide stops and small size, but i think i would make more money if i was for patient

Comment by LineChart on October 1, 2011 at 8:28pm: if you lose the 200 and still think you want to trade

get a trading coach

Comment by Peter jcp on October 1, 2011 at 9:22pm: Yes Linechart - Scalpers do have more access to self sabotage. If their method does not work after say 100 - 500 trades in all market conditions - they know and will change and find a different method . This become apparent easily within 2 weeks to one month.- sometimes it might take 3 months With longer term traders it can actually take them over 6 months to find out its not working and with really good MM you can go a year plus before you see the light !!!

I agree with you on Demo accounts. A brilliant "sales tool " invented by brokers to "fish " you in to the next stage. I think we all need to use them and then as you say - get on to any real account - nano or micros and then find how emotions come into trading as possible. I have flipped several times on my journey but know of others who have got through the "barrier" first time. She was actually a mentor for me and lived in Ireland. She had become really excellent on a demo account and after 6 months went live with a £40k account . She took it to £78k within a month with trades between £60 and £100 per pip and one day - by mistake she thought she had come out of a lossing trade with a £2k loss - only to find - she had not exited the correct trade and eventually later that day she lost nearly £9.5k. That really scared her but within 2 days with so much self discilplne etc she was back to normal.

I have had similar experiences and ended up compounding up to over £150 a pip - to then have 3 losing trades and a massive complex - thinking I am a "loser" and I should forget trading etc etc. Slowly going back to £10 per pip and then upwards I got back on the road again - but it took me months to regain confidence and having confidence in the thousands of trades that had worked.

My strenghts are analytical, persurvering, discipline, patience ( I dont suffer from road rage when driving - much to the annoyance of my wife who does not suffer fools lightly) and thinking outside the box. My weaknesses are being too positive , too easy going, forgetful at times and although not frightened of hard work - I can also be lazy and needing the boot up the backside.

Mindset is so important Linechart and you have done the right thing recognising you are not patient- and are probably working on it.

I switch off my super competitiveness when trading and remind my self every day I will lose on a trade or two and that even top salespeople do not "close" every sale. I also remind myself there are far better traders than me out there. Being humble and wrong takes guts and strenght - but we are all human - we will make mistakes - just dust yourself down and carry on - dont give up and if you dont get there eventually - move on with having learnt another lesson in life

Comment by Merit on October 2, 2011 at 5:03am: Always admire Lisa's Gut and knowledge on Candle Stick.

Plus her system.

Peter very specific saying 2% of Capitail, which means he is doing bigger and bigger trade.

Using 10 years become a millionaire. Rather then this month 500k next month 20k in the account balance.

Good to learn from you guys

Sex, Lies and Forex Trading

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