I’ve tried trading Forex on and off for a couple years now. One issue I kept grappling with was discipline. I would know my entry points and exits before starting a trade but sometimes would hold gains and/or losses too long. The biggest issue I had was leverage. My logical mind would target 5:1 risk. Then I would rationalize and say 10:1 is okay since this money is more speculative in nature. But then after some wins and over-confidence, some of my trades were as high as 20:1. Sometimes with multiple positions too. I actually was able to turn $1300 into $4700 in a month. However, I was highly disappointed in myself and closed my account. I know I got lucky and knew I lacked discipline.
I was always trying to develop my own system. I tried to create an approach that basically had two technical indicators and a fundamental indicator. When all three were green (or red) I acted. The problem with creating my own system was that I was constantly tweaking it rather than sticking to it. I also was not thinking of backtesting. (hard to backtest fundamentals). I have some background in statistical modeling as well and tried to develop some predictive regression models. I thought I could be more creative than the pros. Everyone uses variables like volume, moving averages, GDP, unemployment, etc. I thought I could find correlations with more unusual variables that no one was thinking of such as weather, economic news mentions, etc. Constant tweaking again made it hard to be consistent.
I’ve long been fascinated with global markets, economics, quantitative analysis and finance. I have an entrepreneurial background and have been involved in database marketing most of my career. I truly feel that I would be well suited to make a career out of Forex trading. I recently read a book that really resonated with me and outlined some systems that really made sense to me. I feel this will help with my discipline problem by following these systems and the backtesting requirements will be great for me to follow. I want to give Forex another try.
So why am I stuck? I read through just about every post in this forum. (glad I found babypips as there seem to be some great people here mostly). It really bugs me that I don’t know a single person trading professionally. Lots of advice about finding a mentor but I have no idea how to proceed and am skeptical about reaching out to folks found on the internet (no offense to anyone out there). I’m hesitant to reach out to authors of most books as they almost all sell some sort of training and I wonder why they bother with the few thousand from training fees when they can make “millions” in Forex. I also have issues with folks that talk about compounding or pip gains on a daily/consistent basis. You often hear things like, just 1% a day, will get you to a million in a year! Sounds very modest and achievable to get 1%. The key is to get 1% EVERY day which is impossible. I also wish I personally knew at least one person trading full time and making a living. I know about 10 that lost their investment. I even know one person that made a few thousand dollars a year on a $25,000 investment and is selling training classes (crazy to me to sell classes when I don’t think she is that successful). I know other industries/professions have low success rates too but I do personally know successful business owners, real estate professionals/investors, investment bankers, professional athletes, etc.
Having said that, I do fully believe that achieving financial independence is possible. I also believe I have the ability to get there. I understand it will take hard work, solid systems and probably most importantly, discipline.
I’m ready to try again. The only lingering questions I had were:
- How can I validate that it is possible to earn a serious living ($200k+ annual income) trading forex? What is realistic initial investment?
- Are there any groups or trading rooms in the NY area I could look into and possibly witness/meet actual forex traders earning a successful living?
- I read a lot about benefit of mentors… how important is that? How does one go about finding one (a bit skeptical that successful forex pros frequent message boards to help newbs like myself). Or should I just follow the systems in the book I love?
Thanks for taking the time to read this rant.