The beauty of Forex trading is that it can be a stream of income for you and your family. The sorrow of trading is finding out that it is not as easy as people say it is.
Honestly, Forex trading, along with other trading approaches, have brought pain and measures of poverty into many peoples’ lives. At a first glance, trading seems helpful and for many, ends up being harmful. From a first glance, trading looks promising but for many, ends up painful. At first glance, it appears to be a get-rich-quick phenomena but for many, manifests as a get-poor-quick catastrophe.
If that is your experience, you are not alone and I would like to present a cure to this catastrophe. The cure is knowledge. “People are destroyed for lack of knowledge.” Chances are, you did not become rich overnight trading Forex. If you did, stop trading, and read this article before you lose your money.
You can have a desire to be a boxer but, without knowledge and training your going to get knocked out. You can watch “Lord of The Rings” and want to know how to sword fight but, if you are not trained by a skilled swordsman, say good-bye to your fingers. Say good-bye to your toes too for that matter. The same is true with Forex Trading. We see Joe Smo make 50% per month. We see Dr. Smellfungus make more money in one trade than we have made in one life time. We see George Soros make 1 Billion Dollars on a Great British Pound short. Seeing doesn’t give you the ability to achieve until you add knowledge and training to the equation.
We have all made mistakes trading. That doesn’t mean we should give up. Anybody can be a quitter and many are. It’s the small majority that press on past the status quot and achieve greatness. Is it possible? Yes. So, what do I do? Get up, dust off your shoulders, GET EDUCATED, and try again.
In the Bible, the book of Proverbs says “Enthusiasm without knowledge is not good; impatience will get you into trouble.” Oh, so true! Many of you have failed because you got excited about Forex, thought you could tackle the markets without education, tried, failed miserably, and gave up. You had enthusiasm! That’s awesome! Before you take action though, mix your enthusiasm with knowledge.
It’s comparable to an enthusiastic six-year-old who just watched his first NASCAR race with his Dad. After seeing the colorful metallic machines called “race cars” fly at speeds of 200 miles per hour around an oval shaped arena, the young guy gets an idea. He thinks to himself: “Self, that would be fun, I’ve seen dad drive, let’s give this thing a try.” He is fearless, exuberant, and ready to conquer the streets. He gets in the car, starts it up, his eyes are as wide as basketballs, and in his mind he is thinking “I’m about to have the time of my life”. The reality is just the opposite. Thankfully, at that moment the Dad comes and saves the day from what could have been a horrible disaster. When we hear we can make money trading Forex, our eyes get as big as basketballs, we are ready to conquer the markets, conquer the world, make our quick million but, do you even know what you are doing?
What are you doing?
Let me be the “Dad” for a minute here. Reader, you may need to shift down a few gears. As a matter of fact, put your car in park. Get out of your car, and go to school, sit down, and learn. Get some knowledge before you lose your money. You may have won a few big trades and now think Forex is the easiest thing in the world. WATCH OUT, you might lose all of that and more if you are not educated. For many of us, winning has not been the case. Dad said “don’t put your hand in the fire”, you did anyways, and you have been burned. Now you know not to put your hand back in the fire.
Many times we fail because we didn’t have knowledge, we didn’t have a plan in the first place. If you fail to plan, you are planning to fail. Let me say that one more time, IF YOU FAIL TO PLAN, YOU ARE PLANNING TO FAIL. If you approach Forex trading as a get rich quick scheme, be prepared to get poor quick, because Forex trading is not a get rich quick scheme.
The stats are out and say that 95% of Forex traders are losing money. That isn’t surprising to me because of what I explained above. It isn’t a shock that you have been losing money. Please understand that even after you have a proven plan, there will be months where you lose money. This is trading, not a magically money tree. Many have been brainwashed by Forex marketers and their products. Some of these are legitimate, many are not. If you see a system that says, “You will make 50% per month guaranteed”, RUN and RUN FAST. If you try it and it works, please tell me so I can use it. Chances are, it is garbage.
So, you have realized your current state of hopelessness. Now that you realize you need help, let’s talk about education.
You do not need an MBA or PHD to trade Forex. The beauty of Forex is that you can make money without a formal education and it can be a stream of income for you and your family. I would like to suggest that there is a process to becoming a Forex trader. It involves education.
You don’t just wake up one morning and have a revelation that you are a Forex trader. No, no, no. If my doctor told me that he didn’t go to school, and that he just woke up one morning and found himself in a doctors gown, I would laugh, scream, and maybe run for my life.
There is hope for you!
Two Key Educational Principles
To take advantage of the markets, we need to understand the markets. Understand that day trading may not be for a beginner. Understand that fundamentals play a significant role in market movement. Know that the market can trend or range and you can discern what direction it is currently moving.
It is always good to have your foundation in place. Your foundational understanding of the market is what will keep you grounded during the storms of losing and the celebrations of winning. Some traders do not understand even the very basics of the Forex market. In the Forex market, currencies are trading against each other, news events, and national monetary policy affects the currency values. These are basics but let’s get them in place before we try to build an account. Being a house without a foundation is stupid.
Now that we have knowledge, we have something to work with! Let’s apply it. With 4 Trillion dollars of liquidity in the Forex market, you can surely bring some of that cash home. Let’s see how. First we need a plan.
Goals & Plans
This is fun! Goals are awesome! The sky is limit. Let’s set some goals to be purposeful in our trading. Goals like “$30,000 in 10 years to pay for my daughters college”, “$5,000 this year”, “25% ROI this year”. You get the idea. Goals will act as water marks in your trading. “Okay, I made it to this level, let’s keep going.” Goals will also motivate you in your tough times. Keep pressing in to reach those goals.
Goals are great put we need a plan to reach them. A goal without a plan is a fantasy. Most Forex traders are living in fantasy land. They see stacks of hundred-dollar-bills in their minds but simultaneously have money falling out of their pockets. Wake up, smell the coffee, and get a plan.
A trading plan is your blue print to success. It is what will get you from point A to point B. If I live in New York and want to get to Mexico City, I better have some directions. That is a 2,500+ mile drive with a lot of opportunities to get lost. I need a plan or I’m planning to fail. If you have a map, and you make a wrong turn, not a big deal. You can look at the map, see where you are and get back on course. If you have no map, you can find yourself flailing, and panicking aimlessly in dangerous terrain.
We have great resources on the Winner’s Edge Tutorials page concerning trading plans.
No that you have your plan, let’s execute it and see some results.
Demo trading is a non-negotiable. It’s like the little kid who sees Lance Armstrong flying down a path on his shining world-class bicycle. The kid says “Mommy, I want a bike” and the mom graciously gets a bike with training wheels for her young daughter. The training wheels are for the daughters protection so eventually she can enjoy the thrill of riding a bike without training wheels. The same is with a demo account. You can follow your trading plan and see if it works. Your protected, so eventually you can enjoy the thrill of making big money trading live. After being profitable for a certain period of time, you can graduated into live trading with a small account and progress from there.
We have all made our fair share of blunders. Hang in there. The 30th President of the United States, Calvin Coolidge said this:”Nothing in the world can take the place of persistence.”
Let’s keep pressing on to reach the goal of consistent profitability.
Your in a great spot. You have everything you need available to you, be patient, learn, and become a successful at Forex trading.
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