Long Term Potential

Hi everyone, just got off the phone with a finance manager. My wife works at a country club and after speaking to him she gave him my number. Obviously the two of us are in two different worlds of finance. There was agreeance on a few topics. A general non understanding on a few things. But overall this was the tone set to the conversation:

  1. only funding a forex account with money you can lose(speculative capital). Who can argue that.
  2. extremely rare are situations where traders beat indexes.
  3. 95-99.9% of retail traders lose over the long term.

I’m interested to hear any and all thoughts. I’d really like to hear from others who are making profits and senior members how they feel about this questions:

Is forex trading something you believe will,or has, changed your financial well being and quality of life?

Personally, I’m profitable but on such a small scale that the $60 bucks I made last month isn’t changing my life. I could take my profits out and fill my truck with gas. Hooray lol. I probably spent 30-50 hours managing those trades last month.
I understand compounding and where that could go. So I don’t need pipe dream calculations made for me. I can do that myself :).
What I want to hear, from experienced traders, is how you feel and think about us beating common investment methods like indexes and mutual funds s&p etc…
Thanks

Hello Braden…

I wish I could answer this, but… I am not an experienced trader…

I share in your sentiment about the “time versus money” conundrum: is earning $60 with up to 50 hours

of work really time well spent? It is a difficult question …

Pip, I’m gonna go ahead and guess this post gets buried by 5,000 posts about where is XXX/XXX going next. Riddled with answers that are guesses by people that don’t realize that if you know how to trade you don’t care. I used to only be knowledgeable of 25% of what was talked about at this forum. I’d guess this forum only covers 50% of what I’m knowledgeable about now. This place is a lighthouse to the lost but being a lighthouse keeper sure can get boring! Lol. Thanks for the response buddy

You are welcome, Braden… And, I agree, there will probably be another billion posts about EUR/USD to bury your thread in the newbie-traders’ graveyard ;))


Hi Braden, i’ve been trading for just over one year, so I am not exactly an experienced trader, however, I am a profitable trader. To answer your questions, I think you first need to ask yourself the following questions:

  1. Why do you trade forex?
  2. Do you believe you can beat the indexes in a market where 95-99.9% of retail traders lose over the long term?
  3. Is $60 profit for 50 hours of work worth it to you?
  4. When do you plan on quitting?

Question number 4 should not exist.
If it does, if you have any doubt in yourself, if you have one foot out the door, then just quit right now and save yourself the time, money, and stress.

Jake

If there is no monetary reward involved to trade in forex, would you still do it?

The number one reason why people are so drawn to try and learn how to trade because of the monetary reward attached to it and " hoping" to make thousands or millions in years to come. Most of them gave up because they do not know how challenging this market is and they do not know how to deal with this challenges. All they want is " I want to earn money right now"… If you are passionate about of what you do without any money attached to it, you do not need to ask this questions. You already know the answer to it and that you will trade for a long time and it doesn’t matter how much money you will earn or maybe there are months or years that you do not make any. If you like and passionate about what you do and you are good at it, money will follow… These can also apply not just in FX world but outside of the market as well…

Maybe write down in your journal and list all the reasons why you want to be a trader and what are your plans or goals for the next 5 years or how do you see yourself in the next 5 or 10 years from now. Writing goals in personal, family, and career life is a way of making " commitment" or promise to yourself that this is what you want to be or do and this is how it looks like…and then stick to it…

Good-luck!

Hey Braden !

I’m not exactly a profitable experienced trader but here’s what I think /each to his own/

I think we need to see it - trading currency from a little bit of different perspective in order to achieve consistent profitability rather than treating it as a gambling. Not everyone is cut for managing their own capital. In order to successfully manage your funds /consistent profitability/ you’ll need discipline, clear cut plan & goals and most importantly you have to know what you’re doing - know your game in and out. Think of it as if you’re a fund manager and go from there. How many of us have that broad perspective on trading ?

On top of that we’ve got trade execution and money management - key to consistent profitability. I doubt many of us are ready to put in the work in all of this - lets face it - its a lot of work - a lot more than you’d do if you were working for someone else - thus why the pay off so great. But the question remains are you willing to put in the work ? And I disagree with people who say anyone can be successful in trading - I think that in itself is a pipe dream. So you’ve really got to do some thinking firsthand try it out yourself and then decide go from there. But a lot of people fail to go through these phases that are crucial I think and just blindly focus on monetary gains.

Passion and drive yes you need that in trading but that alone won’t take you far if you don’t go through these phases and constantly evaluate yourself and know your game in and out. Passion alone isn’t enough. Each to his own. You asked and thats what I think.

  1. only funding a forex account with money you can lose(speculative capital). Who can argue that.
  2. extremely rare are situations where traders beat indexes.
  3. 95-99.9% of retail traders lose over the long term.
  1. From a beginner perceptive, Yes for sure.
  2. I have no idea how well index funds perform. But from what I have searched on myfxbooks, it seems wealthy-experienced forex retail traders aim for a steady 2 to 5% per month.
  3. I cannot find it but I remember a thread on forex factory where a guy posted data from a broker showing it was more like 70% of looser vs 30% of winners. I am not sure if that was 30% of long-term winners tough. The lack of data on this is terrible :confused:

My 2 cents. I believe traders lose money in the long run, because they alter one or more of 3 basic principles. 1. Trading Method. 2 Money Management. 3 lose their discipline and patience.

  1. Trading Method. Every day someone is coming up with strategies, indicators, theories, opinions, and other information etc. that can use to change your trading method. Doesn’t matter if you’ve been trading the same method for the last year or more and especially if you’ve been trading live under a year. It can be a major change or a simple one. Example take me. Today I entered a pending trade at 7:40 AM when my trading rules say not to open 20 minutes before or after NY open. It’s not a big deal, because I did all my analysis, cause I got up early today and my plan was to set the trade and go back to bed and there are no major or medium announcements scheduled today on the pair I want to trade. But still my rules say no new trades 20 minutes before or after.

  2. Money Management. The plan you designed is meant or should be meant to build your capital and at the same time protect what you have. How many times especially under six months, but maybe a little less no matter how long you’ve been trading do we move a stop or trade without a physical one, or add to a losing position. Again example myself. Although I don’t move my stop loss, I have added to a losing position.

  3. Patience and Discipline. The biggie. Day after Day after Day after Day, doing analysis the same way, waiting seems like always sometimes for the market to come to you, or you’re intentions are to enter a trade based on your analysis or a take profit and you don’t have the patience or discipline to wait or follow your plan.

Long term is easy to say and understand, not always so easy to do. Like most things in life, it’s work in process. Again my opinion
Gp

+1, especially when you trade my way. Its like

I don’t believe the 95%+ failure rate either. Failure only occurs when you don’t get back up, dust yourself off and try again.

Yep… Most of them gave up for first year or two or maybe when they have a string of losing or blowing up a account or two…

You can apply all the basic you need that is available to you or even the advance one but if you are not committed to it it’s not going to work long term. Commitment starts when you decide that this is what you want to do. Commitment that you will do anything and everything to become successful and profitable trader. The 95% failure rate should not be the defining factor if you will be one of those failures.

Losers will always find a way how to lose and fail and they will drag you with them to be one of the losers…Winners see losing ( learning from mistakes) as an opportunity to win and win big…

I agree with everyone!!! I am not a successful trader…actually, I started trading with real money (2 months ago) after 2-3 years of learning and demo trading but I have developed a system that earned over %100 in 6 months with my demo account. My plan is to follow the rules of my system, invest small amounts of money every month and achieve success trading currencies. Some people will say “ah, you are just at the beginning…you just started trading with real money…you have to learn a lot about psychology and money management” but I learned that trading my demo account…I was afraid of losing money from my demo account simply because I wanted to be successful from day one! I also didn’t know how to manage my risk! And now, when I trade real money, I’m not afraid because I understand that I have to lose sometimes. I know, it would be much better if I started trading with real money earlier, but I learned enough and I don’t plan to give up on trading, even if I lose a few accounts. Trading (and every other business) requires a lot of hours and days and years of practicing but I’m sure that the rewards are better than in most of jobs. My advice to you is to do the following:

  1. Learn the basics (finish the BabyPips school, read a few good threads, read about other people’s systems) - don’t spend too much time on this
  2. Take a few things that you like from other people’s systems and build your own. Don’t trade like other people because you are a completely different person
  3. Test your system on a demo account and try to adjust the system as the time goes by (make sure you write a trading journal and make sure you attach screenshots to it)
  4. Make sure to overcome feelings and manage your risk/reward
  5. When the system is good enough, open a real account and trade the same way you did on a demo account
  6. Repeat everything. Find new/better ways to trade

And the most important: NEVER GIVE UP!!! LOSERS GIVE UP…

+1 Great post
Best Wishes and Continued Success
Gp

I am trading with 1 1/2 yrs experience so far. Just as they say, “Step 4 - When to quit” should not be a consideration. Edison took 1000 times to make the lightbulb successful. They asked him why he did not give up after so many times of failure and his reply was he simply learned 999 ways not to make the lightbulb. I believe forex as with anything else is a learning journey, a dance. U got to put in the hours, the practice and get a feel for it. I, for one am learning much each time i fail. I hope that we can all get on the stage and show our groove sooner or later. Have much patience, my friends.

In my humble opinion, as long as I can make atleast 20% a year, I am good. Although, I know I can make more than that and I already am. I just need to save up more capital to boost my earning potential. I will only worry about S& P or other indexes when I start trading on those other than that, I dont really care. I will let someone else worry about that for me…and I’ll even pay for it lol…

What is your definition of successful?
What do you have to gain by starting a post by saying “I am not a successful trader”?

Realize, that, humans have a deep subconscious. By using talk like this, you are sabotaging your potential and putting yourself down. Yes, I completely understand that by telling yourself you’re successful, you won’t wake up successful the next day. But, by avoiding using terminology like this, you’re not causing any harm to your psyche.

Rather than saying “I am not a successful trader”, why can’t you say…“I’m climbing the learning curve, and know that some battles will be lost, but, the war will be won”.

That first question is so important, and, so difficult to answer.
You can verbalize that success is equal to x% gain / year.
But, is that [B][U]really[/U][/B] what success is? …food for thought.

Not every trade will be profitable.
But, if you work hard to shift your mentality toward positivity and professionalism, your trading will undoubtedly be improved.

I believe you all have misunderstood my question “When to quit?”. Everyone quits at a point. You either choose to quit as a success or as a failure, you can either choose to quit on a winning note (eg Sir Alex Ferguson, Philip Lahm and so many others) or you can wait until you get forced out. But everyone must quit when death comes knocking.

I agree with you…that’s a much better way to say that. :slight_smile:

Well, back from my week hiatus from forex. Focused on other investment options. Aside from building equity in real estate, I’m focusing on index funds. Finally got around to reading random walk on Wall Street and a couple other books. I know everyone hated jadd806 but he wasn’t dumb. Forex trading will always remain a hobby and source of entertainment for me but I’m moving to the slow steady growth markets that are rarely beaten over 10+ years. Forex is going to account for approximately 2% of my portfolio from now on. But the days of having alerts wake me up to manage my trade are over. I’m just over the headache because if my trading produces 20% a year and an index fund produces 10% a year I’ll take the 10% and sleep like a baby while some poor (probably rich) schmuck worries about our money.
Everyone preaches the amazing power of compounding but don’t apply it to “safer” investment tools. I do. I’m 28 now. Whether forex ever pans out or not won’t matter to me. The chances of me reaching 50 years old with much less than ~$1M in assets is slim. If you don’t think a monthly contribution to steady investments can produce real results over 20-30 years you’re just wrong.
I’m diversifying like an adult now. No more BS or pipe dreams