The answer is a resounding no. If you think you have to work hard to succeed at forex trading or that being smart will help you, you're in for a reality check...
In life working hard can bring you bigger rewards in forex trading its all about working smart and learning the right knowledge, If you work extra hours in real life you get more money on most occasions in forex trading you get rewarded for one thing and one thing only:
Being right with your trading signal.
It can take you 5 minutes or 10 hours, it doesn't matter it's the result that counts.
In forex trading the very best traders are very often not educated to a high level, they use simple systems and in currency trading this works here's why:
Simple systems work best!
They always have and this can be proved by the fact that 50 years ago 95% of traders lost and they still do today, despite all the advances we have seen in forex forecasting and technology.
If you try and complicate a trading system, it has too many elements to break in the brutal real world of forex trading. Simple systems tend to be more robust.
Clever traders who think they deserve success very often lose.
The problem is they come with an ego and an ego means they like to be right.
Well in the forex markets you are going to be wrong a lot of the time and the market is going to make you look a fool. Remember, there is only one right price and that's the market price.
Of course in forex trading you have to take losses, that's just the way it is - but that doesn't mean you can't make money you can.
Some of the best traders I have seen or read about are card players. Why?
They now how to hold, fold and bet and that's exactly what you need to do in currency trading. A simple system that trades the odds is all you need and that's easy to build.
You then need the discipline to follow your system and be humble - take your losses cheerfully and run your profits.
In my time I have probably taught 5,000 + traders to trade and the most successful one was an 81 year old lady who owned a sheep farm called Louis.
She wasn't smart (which she would admit) but she had a simple system she applied with discipline and she piled up huge profit.
On the other hand I have tried to train some mathematicians and of course they were smart but could they take losing when the market turned their clever systems to dust - no, their egos just couldn't take it.
So there you have it education is no barrier and to success and simple systems applied humbly with discipline is all you need.
Monday, September 1, 2008
Forex Price Movement - How and Why Prices Really Move
This post is going to look at how and why prices move and how to win. Most novice traders make the mistake of thinking prices move to news stories and try and trade them or to some scientific theory - they don't. Forex prices are chaos - but that doesn't mean you can't win, you can and to do so, you must understand the key point of this article...
Here is the equation for market movement
Fundamentals (Supply and Demand) + Investor Perception of = Price
While the above sounds simple and it is most traders don't understand that the facts are NOT important it is how they are perceived by all the investors as a whole that is important.
Many people trade breaking news but it won't help you as it's discounted immediately and furthermore, investors are always looking to the future. To illustrate this think about this fact:
Market bottoms normally occur when the news is most bearish and market tops, when the news is most bullish.
The fundamentals are important long term - but in the short term prices are determined by the greed and fear of the investors, it's what they all think as group that determines price.
Many traders think because human nature is constant, there is a scientific theory of market movement - but of course there isn't. If there was, we would all know the price in advance and there would be no market at all.
Forex is an odds game and your aim is to trade high odds set ups, when the patterns of forex price movement dictate you should and the best way to do this is to use a simple robust trend following forex trading system.
Forex charts show you the supply and demand situation (they simply assume that all fundamentals show up in price action) but they do so something more - they tell you how all the investors perceive them.
Forex charting and technical analysis is not a science, it's an art. You're in fact, playing a similar role to a good poker player. You are looking to bet big on high odds sets, fold ones that don't go right and pass by low odds set ups.
Just like the poker player, you won't win every hand - but if you play the odds, you can win more than you lose and make a lot of money.
Forex charting is easy to learn and if you make it part of your forex education, you can learn it in about 2 weeks and get a robust forex trading strategy together which, you can apply in around 30 minutes a day.
If you can master it forex charting and spot high odds forex price movement patterns, the rewards are huge.
Here is the equation for market movement
Fundamentals (Supply and Demand) + Investor Perception of = Price
While the above sounds simple and it is most traders don't understand that the facts are NOT important it is how they are perceived by all the investors as a whole that is important.
Many people trade breaking news but it won't help you as it's discounted immediately and furthermore, investors are always looking to the future. To illustrate this think about this fact:
Market bottoms normally occur when the news is most bearish and market tops, when the news is most bullish.
The fundamentals are important long term - but in the short term prices are determined by the greed and fear of the investors, it's what they all think as group that determines price.
Many traders think because human nature is constant, there is a scientific theory of market movement - but of course there isn't. If there was, we would all know the price in advance and there would be no market at all.
Forex is an odds game and your aim is to trade high odds set ups, when the patterns of forex price movement dictate you should and the best way to do this is to use a simple robust trend following forex trading system.
Forex charts show you the supply and demand situation (they simply assume that all fundamentals show up in price action) but they do so something more - they tell you how all the investors perceive them.
Forex charting and technical analysis is not a science, it's an art. You're in fact, playing a similar role to a good poker player. You are looking to bet big on high odds sets, fold ones that don't go right and pass by low odds set ups.
Just like the poker player, you won't win every hand - but if you play the odds, you can win more than you lose and make a lot of money.
Forex charting is easy to learn and if you make it part of your forex education, you can learn it in about 2 weeks and get a robust forex trading strategy together which, you can apply in around 30 minutes a day.
If you can master it forex charting and spot high odds forex price movement patterns, the rewards are huge.
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