I was wondering how to make money in forex. Is it realistic to actually win? I am not talking about billions and gazillions I am rather talking about making a reasonable amount of money.
I mean it is a lot of fun seeing those candles flipping around. That is why I am fooling around with a demo account. But I am not quite sure if it is worth spending that much time into learning all the stuff about forex.
Well, the problem which bothers me is that I don't think that it is possible winning at least for 90% of the people. Why? Let's say I have learned all the stuff I had to, I know all the basics, I am good in fundamental / sentimental / technical analysis and of course am willing to learn new things and I am diciplined enough to "play the game" the one thing I will never learn is how to rule the market. The market has its own rules and I will never be able to look into the future to see what will happen next. So why learning when in the end you will lose the one way or the other?
I may not have all the answers, but by what you just said you are already one step ahead of most traders, its not about ruling the market, lets say its more on lowering the chances of loosing in a trade, the low losses means bigger wins and with enough given time, watching them candle sticks will be fun one way or another >
You make money one of two ways in forex. First is to understand you can not make the market do what you want it to and from there you must figure out what the highest probability for you to make money.
Or the second and become a member of the FXMEN and I hear you get a cool decoder ring that will tell you what the market will do.
90% of people lose, actually i had 2nd hand info that a study conducted by bear stearns says only 7% are profitable. I got that number last week so it should be fairly up to date but then again its just rumor i have not seen the study myself. 10% is the general number for all types of traders.
I think the question that comes off every newbies mind is Why such a small fraction? Its not just risk, its not just process, its not just psychology. Really people harp on the same stuff over and over again. The reason why most people fail is because a million things can derail you. Really its about consistency and alignment. You must have a profitable system that provides an edge over the markets, be in a good psychological state, have a reasonable money management strategy, and be able to repeatedly execute trades while all of these factors are in alignment no matter what. If any factor is off, it will be detrimental to your financial health.
Most people think that having a system that provides an edge over the market is having an edge. Which is definitely part of it but there exists something called the "profit gap". This gap is caused only by the trader. The potential of the system vs the results of the trader. The best example of forward testing of this that most people experience is the difference between live accounts and demo. But here is a more concrete example, imagine you have a completely mechanical system that provides an edge over the market and have a computer trade for 1 year. Now you have a trader who trades the exact same system by hand, for the same year on the same instrument. The closer the trader's result to the computer's result the smaller his 'profit gap' is or rather the smaller negative affect his other elements detract from the system. sure this could go into EAs and bots etc to remove that and that is what some people do. But I think that the clearest example.
Basically bottom line, you could give a completely profitable system to a trader and his profit gap could be so large it actually returns him negative results. Completely independent of the system itself, purely because his own performance is not adequate enough to profit from the system.
This is going to sound counter intuitive but has worked for me since i began trading profitably.
You said : Let's say I have learned all the stuff I had to, I know all the basics, I am good in fundamental / sentimental / technical analysis
This isn't everything. You need that but you forgot the most important thing. And thats having the discipline, patience, and emotional control to be able to apply everything that you know. That is more important than fundamental and technical analysis.
I have an edge in the market and i repeat the process every day. I wake up at the same time, eat at the same time, go to the gym at the same time, and trade at the same time. Even my sleep, my diet, my workout training, is all part of my trading method. Even my free time during the day and weekend so i can have balanced life, is all part of my method. When i leave to go to the beach or the country side on the weekend, is all part of my trading method.
When you get to that level, you become profitable in a mega way. Trading to become mega pro isn't a job, its a lifestyle choice.
If all i had is my method, and technical and fundamental skills, without the rest. I would lose my accounts.
The reason i say all this is because i know it may seem like some god like thing to become successful in this industry, but it can be done, once you do the yards.
I always use the analogy of a pro Olympic runner. To become a pro olyimpic runner might seem like a god like thing, but there are people who do it. You need to be so serious about becoming a pro trader, that it's the equivalent to becoming a pro Olympic runner. Then you will make it.
You said it yourself, "the market has it's own rules". All you need to do is find a way to exploit those rules.
If anyone reading this thinks you can't make money. You won't. Knowing that you will do what ever it takes to learn how to make money in this industry is almost half the battle.
Yoda (star wars) says: You must unlearn what you have learned. A normal 9-5 job mentality and thinking like the 90% who lose is going to be the surest pathway to losing. You must unlearn what you have learned. Trading is almost complete and utter boredom. The doing is in the not doing. It's in the thinking. When you become pro you stop over analysing and all you do is sit there, and wait, and wait, and wait some more until you find the perfect trade.