3 Hard Truths About Forex Trading
The purpose of writing this post is to share with you guys the 3 bitter pills to swallow about forex trading. The reason why I am writing this post is to make most of you here realize what forex trading is all about and stop listening to those advertisements that you have seen.
The problem with 90% of new traders is they have wrong perceptions about forex trading and as long as they do not wake up from these wrong perceptions, they will never be able to really make money from trading.
So let me spend sometime to discuss with you about those wrong perceptions so that you can see if you are one of those who are suffering from the problems created by those wrong perceptions.
1st Hard Truth About Trading
I have students who wanted to make thousands of dollars every month with just $500 in their account. I dun blame them as I have the same thinking in the past when I first started learning forex. I have came across seminars where they claimed that their students are making $10,000 per month but what they did not tell you is those students have an account of $50,000 to $100,000.
To make $2,000 per month from a $500 account, you will have to grow the account by 400%
Since becoming a full time trader, I have made friends with other full time traders as well as institutional traders. What I have found out is all of us are growing our account by less then 100% per month. I have friends who made 20% growth to his account per year while I have friends who made 15 to 40% growth to their account per month but never once, I met anyone who make 300 to 400% per month.
If there is a strategy that can grow an account by 400% per month, you will be a billionaire in no time. Imagine you have $10,000 in your account and you have a strategy that can grow your money by 400% per month, this is what you will get by the end of one year
1st Month: $10,000
2nd Month: $40,000
3rd Month: $160,000
4th Month: $640,000
5th Month: $2,560,000
6th Month: $10,240,000
7th Month: $40,960,000
8th Month: $163,840,000
9th Month: $655,360,000
10th Month: $2,621,440,000
11th Month: $10,485,760,000
12th Month: $41,943,040,000
At this rate, you will become the world richest man in no time. If you have the above mentality, it is time for you to wake up as it will never happen. There is no strategy that can make you more than 100% growth per month.
The truth is you can easily grow your account by 10 to 40% per month and slowly your account size will grow and you will make more money every month. Let says that you have only $2,500 in your account and you have a strategy that makes you 20% per month, then you will have $22,290 at the end of one year. As this amount grows, you will make more every month and eventually you will be able to quit your day job.
Imagine that you have grew your account to $20,000 and your strategy makes you 20% per month. You will make $4,000 per month which is good enough to cover the expenses for some people.
Please do not think that trading is a way to get rich quick. You will be fascinated by people making several hundred thousands from trading stock or oil or forex, but what you failed to know is they need a big enough account to do that.
Second Hard Truth About Trading
You need time to practice each forex strategy before you can start making money with it. If you are a student of my Forex Street University Course, you will realize that I often ask you to practice each strategy on a demo account first.
Most students think that they can start making money immediately after taking a forex course. In fact, I do have this sort of thinking in the past as well. However after trading for so many years, I realize that learning from a course and trading from the strategy taught in the course is different.
For 2 traders studying the same course, they may enter a trade at different time as different people interpret the market differently. For example, if I tell you to enter a trade when the price breaks through the trend line, you will still enter the trade differently from me as the trend line that you have drawn may not be the same as mine.
That is why I decided to published the break the bands strategy performance report. This is to allow students to double check their trades on their demo account with mine. From the report, they can then go back and see what is wrong with their trade and eventually they will be able to trade exactly like me.
There is no way anyone can start making money immediately after taking a course, you will need at least 3 months of practice on a demo account before you can go live. Personally, I have students who are now full time traders and they spent close to 8 months of demo trading. To become a profitable, you have to persevere and you will realize that it is worth every second of your time when you eventually become a full time trader.
Most new traders wanted an easy way out to make money but in this world, there is no easy money. Every way of making money need you to put in effort to achieve it.
Third Hard Truth About Trading
There is no strategy that wins 100% of the time. If you have been reading my blog, you will have heard me talk about this point several times before in the blog. 90% of new traders tend to hop from one forex course to another after getting a losing trade from the strategy taught in the course. This is mainly due to their belief that there is a strategy that wins 100% of the time.
However as a trader myself and having friends who are also traders, I can confirm that there are no strategy that can win 100% of the time as there is no way you can predict the market with 100% certainty. How we traders manage to make consistent profit in trading comes from the mix of the strategy winning percentage plus risk reward ratio and this can be seen from my strategy performance report that I have published every month.
Therefore if you are still looking for a strategy that wins 100% of the time, it is time to wake up your idea. The faster you realize this fact, the faster you can better a good trader.
What I have shared above are what I feel is the most important for any new trader. As long as you continue to have the above wrong perception about forex trading, you will never become a profitable trader. If you really want to make money from trading forex, you must quickly digest what I have shared with you above.
Some of you may find the 3 truths above very hard to swallow and these are stuffs that people do not want to share with you as they want you to believe that you can make several thousands easily after taking their course. However if you have been following my forex blog, you should know that I always tell the truth irregardless of you like it or not as I do not want you to live in a world of false hope.
For those of you who are new, you can take a look at my blog post below