Why are you trading?

Trading Discussion
1

Here’s a concept I can’t say I’ve ever really heard discussed on this forum, but if anyone is seriously considering becoming a “professional”, must be aware of.

I’ve been around this forum for years, and I’d say 80% of people have < 10,000 in capital. So, it’s an uphill battle to begin with b/c your considered under-funded which will likely lead to over-leveraging, which all studies have shown lead to failure.

At an ABSOLUTE minimum:
Do you know your debt-to-income ratio–is it < 30%??
Do you have a retirement account setup that you’re automatically contributing to monthly?
Do you have an emergency fund (of b/w 1-3 paychecks), in cash, stashed away?

Here’s the gold- if the majority of you reading this can’t answer YES to those questions, you should stop trading immediately and get your financial house in order. There’s a VERY high likelihood you are trading with money YOU CAN’T AFFORD TO LOSE!

Looking forward to intelligent responses.

2

I am trading currencies in foreign exchange market obviously for money. I am here to make currency trading as my primary income source. That is why I am seriously doing this. Basically now I am concentrating on learning each and everything in forex from what I can improve trading styles, strategies, plans etc. I started with small amount which I can afford to lose. And also I have found a reliable forex broker for me.

3

Any thoughts on my opinions?

4

I agree with them fully.

But that isn’t going to change the fact that they’ll “fall on stony ground” with the very people who most need to understand them and have most to benefit by thinking about them.

(That’s about the location and population where they’re expressed, not about the validity of the opinions themselves, of course.)

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5

If you’ve configured a 0% risk of ruin then your backup plans are irrelevant. If you trust your strategy, you will follow the rules.

I didn’t start trading until I trusted my strategy. As for the initial balance, $4K is a good starting point if you plan on doubling your account every quarter, hitting a million in 2 yrs or so. Any less than 4K and you’ll be waiting an unreasonable amount of time to reach that goal.

6

Good luck with finding 0% risk of ruin (which is statistically impossible), and good luck with turning $4k into a million in two years (which may as well be statistically impossible).

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8

(1) Show me a portfolio w/ 12mo of trading history and 0% ROR.
(2) Show me a portfolio w/ 12mo of trading history and 100% QTRLY gains.

Really feel like I’m just being trolled here, and really really hope that’s the case.

Can YOU answer yes to the three questions posed above?

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13

Not sure why I still even bother trying to help.

Keep this in mind…trading to capture 2, 5, 10% of $1,000 in a year (if you have laser-like focus, minimal drawdown and actually have $1,000 in capital) means nothing if you’re paying 17.5% APR on a $1,000 credit card bill or any amount of interest on a student loan.

If you have any debt (other than what I consider “allowable”, being a mortgage) your rate of return is not what your broker says it is. You need to factor in interest payments and even tied up capital that can be going to trading.

If you’re under 40, trading, and don’t have a retirement account setup that you’re making consistent monthly deposits into (I don’t care about $ amount)- you’re just plain stupid.

The idea of “doing things differently once I have a big enough account” is a gambler’s fallacy. Don’t think that’ll save you either. And if you haven’t watched the video I posted w/ Anton basically exposing the beast behind the curtain and how the FX market actually works- then just keep donating b/c that’s all you’ll ever be- a donator.

I hate being negative, but when there is just so much blind devotion everywhere I feel like I don’t have a choice.
Get your act together before you even try to trade.

To those out there who can answer YES to my 3 posed questions- good for you! You figured it out and you’re likely a mature individual. Keep doing what you’re doing and pat yourself on the back!!

14

Now if that’s not a familiar face :slight_smile:

I trade because I pour a lot of hours into my trade ideas and like to see them blossom,and I enjoy the extra income

15

Ok to me its not about account size. Its about consistency. If you can turn consistent profits on a small account you can do the same with a scaled up account. Concentrate on turning consistent profit and when you do then approach a prop firm if you cant afford to increase your own account. Its a numbers game. Be consistently profitable. Thats all that really counts. It is scaleable if youre consistent.

16

Hi FOREXunlimited,
The whole issue of turning pro is way more complex than those three questions.

  • Yes, you need to be as near to debt free as possible. (I am)
  • Yes, you need enough cash to live on for at least 12months. (I have enough for 4yrs)
  • Yes, you need to peel off a chunk of your profits and sock them away in safe “no touchies” account for when you decide to retire. (I have a special retirement account because the law insists on it)

For me, it’s been 3yrs of just plain hard slog to fix multiple issues (all of them psychological) with my trading.
If your head and strategy ain’t in the right place, there’s no point even trying to turn pro.
I think the first question (before you quit your current non-trading job) is “can I consistently turn a profit month on month?”. Your demo account will prove that. If you can’t make money on a demo account, the real world will be even worse for you.
If the answer to the first is yes, the second question becomes “can I live on that?”

After three years, I can now average between 0.5% and 1% equity growth per trading day. On a $10K account, 250 trading days @ 1% per day would get you to ~$120K excluding any tax impacts.
Sometimes I get lucky. A simple trade the other day gave me a 20% jump in the account (thanks DJT and KJU - you boys just keep fighting - every bit helps). However, that stuff is a very rare scenario and I can’t live on that.
Since nothing in trading and life ever goes entirely to plan, you could (if you and your strategy are good) expect about half that result.
If you’re gonna live on it, I’d suggest at least a $40K starting stake and manage your risk like your life depends on it.
BTW, a strategy that wins less than 51% of the time is less than chance. Your long term odds of success are against you because you are betting on expectancy to save you - and it might not.

Just my 2c worth.

17

Except it may cause psychological pressure (fear of financial instability) I don’t see a solid reason to pay attention to them. Your trading results depend strictly on your knowledge and money management. Why you can’t consider the fact that many people earn their retirement money and improve debt to income ratio particularly by successful trading?

18

Kas! Great to see you still around :slight_smile:
Hope you’re doing well.

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19

So, anything to say specifically on my questions posed?

20

Thank you first and foremost for actually taking the time to read my original post, and provide an actual response!
And - congratulations! It seems like you have your finances in line- that’s great!

As for your trading record…that’s where you lost me completely. I’m sorry, but there is no one on this planet that can make that type of return consistently. Understand if you did, you’d be the wealthiest money manager on the globe. I know you haven’t been trading for long, but to make a claim like that you need to have some proof of your trading record.

As for your comment on “winning less than 51% of the time”…not sure where you’re getting that either.
A strategy that “wins” 30% of the time can still crush it, if you’re highly accurate- although rare. “51%” isn’t a line in the sand.

21

“the fact that many people earn their retirement money…” Care to back that up w/ some data? Where are you getting this from? Can you name some vetted professionals (on this site, or on the web in general)?

22

The 51% is comparing a coin toss(50/50). Statistically, anything less than 51% is no better than a coin toss. I agree that folks can do well on as low as 30%, but as I said in the previous post, that requires a high expectancy rate (how much you win when you win and how much you lose when you lose).

What I do now was psychologically very hard for me to do initially, but now I’m used to it, I don’t stress (as much) over it.

On your other point, I’ve studied markets since 1975. I only got serious about it 3 years ago when my IT career ended due to ill health. I’m not offering to sell or share my methodology. It’s way too valuable to me at the moment. I’m merely responding in general terms to your questions.

23

Sorry to hear about your health- wish you the best on that front.
Agreed on 1st paragraph.

On my second point…understand your methodology is valuable, but I’m not going keep my lips shut when someone claims they’re pulling in a half / full point a day…c’mon man, get real. I can care less how you say you do it, but you need to back that type of claim up with some proof or take a walk.

Again–that type of return would make you the most sought-after money manager on planet Earth.

24

At this point I should just ignore you.

Even your name says ForexUnlimited and here you go on screaming limits to what is possible or not in Forex. If you don’t want to believe the guy, you take a walk. Who cares what you need proof to believe.

The first day you heard about the profit potential that Forex offers, be honest to yourself, did you believe it? Did you not think it was too good to be true?

You asked a question, you got the answer . If you “knew” it was possible, why waste our time asking impossible questions? Please drop the issue and start a new thread on something you believe is probable. Most people here are still grappling with learning the ins and outs of Forex and you’re gonna intimidate and discombobulate them and call them "plain stupid " because they don’t have a retirement portfolio as if you had one the very first day you started trading.

You claim you’re trying to help. Go back and read your posts, you sound too arrogant to be helpful and nobody would probably listen to you no matter how useful your “help” is.

25

At this point I should just ignore you.

You have every right to do so! :slight_smile:

Even your name says ForexUnlimited and here you go on screaming limits to what is possible or not in Forex. If you don’t want to believe the guy, you take a walk. Who cares what you need proof to believe.

That name was associated with a web site I ran back in 2012, which no longer exists due to a vast shift in my way of thinking about trading over the last 5 years.

“Don’t want to believe the guy” - of course I don’t believe him!
“Proof to believe” - of course you need to back up any claim you make about trading to be trusted, with proof.

The first day you heard about the profit potential that Forex offers, be honest to yourself, did you believe it? Did you not think it was too good to be true?

Forex/options/futures/equities/bonds/horse racing – they all offer profit potential. Only problem is actually finding someone with a verified track record to show you 1, 2, 3 year consistent returns and < 10% drawdown.

You asked a question, you got the answer . If you “knew” it was possible, why waste our time asking impossible questions? Please drop the issue and start a new thread on something you believe is probable. Most people here are still grappling with learning the ins and outs of Forex and you’re gonna intimidate and discombobulate them and call them "plain stupid " because they don’t have a retirement portfolio as if you had one the very first day you started trading.

This is where you’re 100% wrong. People would be wise to understand from the jump what is realistic and what is not. Before you even look at your first price chart, you need to have your finances in order or you’re simply not taking this seriously and will likely never earn a consistent return.

What are the ‘ins and outs’ to learn? The fact that the entire industry is designed for the average retailer to lose money? I mean wake up and smell the roses man-- 99% of people on this site will never be able to beat the S&P and will spend countless hours and emotions pouring over price charts and over-leveraged positions trying to figure out where they went wrong.

You claim you’re trying to help. Go back and read your posts, you sound too arrogant to be helpful and nobody would probably listen to you no matter how useful your “help” is.

It’s not just arrogance, there’s actually some anger in there too. Every single forum, every single day you see a new trader trying to make money with pinbar off a support level…this just eats away at me and physically causes distress b/c I see that, and just equate it to a little sheep chained against a pole with a pack of hungry wolves circling.

Yes, there are some strategies out there that will “work”- but over time, the wheels always come off. 95% of people on this forum would be better off letting an actual professional manage (via mutual funds) their money.

Here’s how you become wealthy-

  1. Stop trading.
  2. Close your silly FX brokerage account and pay off all debts!
  3. Save 1-3 paychecks as an emergency fund
  4. Continue to contribute to (or open a new) IRA
  5. Buy no fee/no load mutual funds monthly (diversification and auto-investing is key)
  6. Build up a nice portfolio for 1-3 years

After 1-3 years, you should have a decent little account to start really getting into ‘blue-chip’ mutual funds.

Wealth is not built overnight, or in 3 months or 12. It’s built over years and years of dedication and baby steps.

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