Becoming a Profitable Career Forex Trader
The two most important commodities the masses strive to get more of are Time and Money. The world is shrinking, due to advances in telecommunications, onslaught of media bombardment and our fast paced lifestyle (consumerism). It seems that each of us are embroiled in a race to see who can come up with the greatest quantity of cheese and still have time to eat it before they fizzle and die. Most of us are wildly out of balance, due to our choices and how these choices affect the balance between time and money (lifestyle). As an exercise, each of you need to take 5 minutes, on Sunday after dinner, and write down what the ultimate week would be for your family, if you had a balanced lifestyle, in terms of time and money. It is very important to understand and internalize why you take the extra ‘unproductive' hours in your schedule to learn how to trade. What exactly do you want to accomplish and when? What will you need to learn? How will you grow and change into the trader you want to be? When are you going to finally take control, to start the evolution of your metamorphosis?
In the last two weeks, some of our traders are truly starting to understand the benefits of migrating to a longer term trading methodology; with decreased lot allocation at only 2.5% and a Profit/Loss ratio of anywhere between 3 to 25 times their stop. In our advanced room, we have noticed ‘experiential and emotional' growth in some of our traders, who embrace a newer money management paradigm. Some emails have asked Tim (coach), how to deal with trades in huge profits, as they have never been in this position before. "Tim how much do we move our stop into profit?" This is great! I love to see emails of our traders taking trades and expanding their experience in the market, as they learn how to emotionally deal with TEAM FXP's longer term trading methodology. Exciting!
You do not have to be a rocket scientist, or even own a calculator, to understand that small risk allocation, reaching for a huge profit potential, will edge out all short term trading strategies, with greater risk allocation, over time. WHY?
We are emotional beings. If we weren't, we wouldn't be human. At some point, each of us falters emotionally or physically, therefore, minute gains, made weeks prior, can and will be wiped out, within a few short trading sessions. If you do not believe this statement, look around and ask other traders you know, how long they have been trading, and why they are in the same position as you. The likely answer is the ‘silver bullet' of short term trading strategies, expounded by so many ‘mentors' in the current educational market. The brokers are very adept at understanding human nature and they profit immensely from this. With a longer term outlook, you can lose over 50% of your trades in a month, and still come out with excellent profits. A great example, is some entry orders I made from one of our rooms last week. Now my challenge is the fact that I work insane hours and had some horrible computer challenges last week; 3 out of my 4 trades went into 1:1 profit territory, whereby, I would at least lock in a few pips of profit, to save potential risk to my capital. Due to my circumstances, I was unable to do this, and lost about 6% of my account. One of the trades was positive, and due to its profit to loss ratio, I was up around 7% on this trade, after overcoming the 6% loss. Each trade had around a 2.5% stop loss allocation from my margin. The point is, I can still be human (I make more mistakes than most during a day), but with this longer term outlook, I was in a position to take profits, even with a win-loss ratio of only 25%!
A 30 pip arbitrary stop, with a 10-30 pip gain, needs a win-to-loss ratio, of over 80%, all the time. One session's losses can wipe out a great percentage of gains, and therefore, weeks of profit taking. This leads to back to human nature! Now understand, when starting to trade, it is necessary for trading strategies to exist, for several months, in order to allow people to experience trading mechanics There is nothing wrong with having a couple accounts, one for shorter term, higher risk, and the other as an equity building account. Remember last week I was still profitable, even though my win-loss ratio was only 25% for that week, on longer term trades.
Time and Money
How many people have the time to gain the necessary experience to emotionally de-program from being human? For most people, this will take them at least 10-20 hours per week, actively trading the market for 1-2 years, before they really understand themselves enough to not trade emotionally.
How many people have deep enough pockets to continually fund their accounts in order to fuel their quest for the next ‘silver bullet'? Have you ever heard the saying, ‘successful people look at what the masses do and do the opposite'? A simple homework assignment for each of you, it will only take 10 minutes: Search on Google for Forex, and you will find every advertisement playing on your human nature (greed) and not one of the strategies will be long term 5:1 or 10:1 profit-to-loss type strategies.
FXcourse.com is the only company with an educational curriculum, testing traders throughout their trading journey, from neophyte to intermediate, and ultimately long term. We learn and we earn throughout all levels of curriculum and grow with our traders along the way. We don't just watch charts, we analyze and coach trade entries and exits, according to our curriculum. I am excited to be back in the ITRs and have enjoyed coaching again these last few weeks. We are in the process of helping traders put balance back into their lives, so they can trade and have a life. I hope you continue to make a decision each day to work toward your dreams, to give your family the lifestyle they deserve.