Forex or currency trading is not buying and selling stocks and shares. It’s a different ballgame for me – a bit like comparing cars – ie a Ferrari and a Ford Bronco. They both have four wheels and an engine and seats and are designed to take you from A to B. However as any car enthusiast will tell you – they are so different a bit like “chalk and cheese”.
Talking of “chalk and cheese” or yin and yang - we all will have different views and ideas about how we can tackle this market - but we all have a common goal – we all want to make money and ideally a lot of it consistently without any major massive risks. (yes I think even me and Lisa would agree on that one ;-) )
I think though it is so important that we make our mind up on how we are going to achieve it simply because there is so much incorrect and wrong information out in the market place – and it can lead you on the wrong path.
You could say both good and bad tips have been passed down over the years – from Jessie Livermore and great traders of the past to Barbara Rockefellow – a forex trading veteran of only 25 years;-)
As far as I am concerned, I am still a novice, simply because I have not been live trading currency pairs over 10 years, However the fact that I have spend coming up to 6 years trading the EU day in day out as a retail trader on a full time basis, I have been able to piece together my own facts and thoughts, and develop my own philosophy.
Lets start by saying – not many forex traders are purely full time. I don’t know the actual stats – but ideally to go full time you need a few years under your belt. Over the last decade we have seen a big internet campaign on Forex trading as being the ideal part time business to make you very rich.
This as led to having millions of forex traders around the world and 70-80% of them lose money consistently and normally give up. If we say 10% of forex traders are full time retail professional ( note retail not commercial) then maybe only 20-40% of those lose money – the majority would be making money simply to remain profitable and to carry on.
My own philosophy is so different to so many other traders and tutors – even ones that are highly successful – showing that there are many many different ways to profit. Let’s go though say 20 of them that I like –
- The Trend is your Friend – yes the trend is your timeframe. I follow trends to trade – normally my trends last less than 15 minutes and are small – but still give me RR’s of 2-5 in that time.
- Risk to rewards are not the only important part of trading – agree ideally you need over 2+ but more importantly you need to have a system that gives you more wins than loses – ie 70% + success rate.
- Those guys who say you only need to get 3 or 4 trades out of 10 correct to make money simply because the wins have RR’s over 6 - they are deluded – and inefficient ;-))
- FACT – you make more money by doing more winning trades.
- Overtrading is only bad if you are no good.
- Let your winning trades run and cut your losses quick – true
- The market is either bull or bear – don’t go against the flow – rubbish – ideally you can both buy and sell everyday – If I do say 10 trades on a strong bear down day – I would expect say 7-9 of them to be sells – but still 1 or 2 buys if needed.
- Naked charts are the best – might be if you have over 10 yrs of experience.
- KISS – keep it simple – what in the massive complex dynamic ultra sophisticated high tech fast trading market – wake up and smell the coffee – you need more than KISS ;-)
- Big stops and big target are best – roflmao – talk about inefficient - yes OK ten or twenty years and I will be a millionaire ;-))
- Small stops and small targets are a waste of time – LOL ( ok – I am not on £5k per pip – if I was I would be very happy with a 5 pip target every day ;-)
- The market moves according to thousands or millions of trades around the world buying and selling – yes it’s a good story – but this market is so heavily manipulated its untrue ;-)
- Fundamentals are far more important then technicals. Well I have got an Hons degree in Economics and for investing and long term trading – I would probably use it. For intraday short term trading its about as useful as tossing a coin- or watching the direction of your fridge magnet for a direction hint.
- Trading the major news – big risk and also your in the hands of your friendly broker and its not like on a demo account.
- Every intraday move bar one is false – true – stop hunting as become ridiculous
- If you trade long term you miss the daily “noise” and have better success - yes right then – so you can predict the future –ie the next week and month and know all the news in advance and know everything that might happen that could have an effect on the pair you are trading.?
- You have to predict even if you are only after 5 or 10 pip move. – correct – but with highly sophisticated technical info you have a higher probability of getting flows correct in under 15 minutes than you do over 15 hrs or 15 days or even 15 months – FACT
- Psychology is more important than your strategy – rubbish, think about it if your strats was 100% and you never lost – you would not have a problem. The fact that most strategies are only 50/50 correct that’s why the psychology part is so important. You need an “edge” that you have to find yourself – it come over years of experience. Compounding also creates the psychogical problem ;-)
- Money management is so important – true
- Guru’s and tutors know all the answers and have the “holy grail” - roflmao again
You might not agree with my own philosophy – but that’s good as we are all different – with different logic and ideas – but all with a common goal in trading – to make a decent profit or return – which for me is not 30% per annum. Saying that if my capital account was £5 million – I would be content with 30% - but for accounts under £100k – you need to be doubling or more and with intraday shorter term trading combined with letting wins run – you can do it !!
PS – I notice a guy who we might know in this forum – is topping the FX contest this weekend after taking $25K to over $200k in a month ( 900% approx) – OK it was demo – and MM went out the window – but with proper MM and controlled risk 40% per month + is achievable – when you really know what you are doing ;-))