This gonna be long so, BUCKLE UP
Hi everyone. I am no Guru, I am no financial advisor, or someone who pretends that he has figured the market. As a matter of fact, I am writing about such a serious topic while im currently losing on ETHEREUM right now, which is already not the best way to end the weekend. I am very passionate about the market and I want to see people win. I’m just someone who has just started to become profitable just one summer ago (and Im still actively learning this craft), and this has triggered some deep thoughts regarding this topic. Everything I say is merely backed up by facts, they are opinions based on personal experiences with the markets, and other experiences that i have read on reddits or even here, and conversations with trader friends, as i was doing my personal researches. Please let’s conversate, and let me know what you think.
PS: I will likely edit this post as time goes, polish it and/or add some other details as time goes
Whenever I came across a youtuber or a guru or a blog or whoever that is “profitable” who was touching on this topic, most of them always give me answers such as "because people are not patient enough", “Because people want to become rich quick”, “Because people come to the market with the wrong mindset”, etc etc. Answers which in hindsight are valid. But, i think those answers only scratch the surface of this topic, and hardly really teaches you how to not make those mistakes in the first place. They are true but vague.
Let me explain
2015, I was marketed: “Hey you!!! Yes you… Do you want to learn how you can make £1000 per day from your phone? FOREX. If you follow this simple proven 80% winning rate strategy, you will dominate the markets, like all my students”. There! You see this bs right there? That’s how I started losing my money. I got marketed into learning how to trade, or to be precise, learning how to follow a simple strategy that’ll make me £1000 a day. It took me 4/5 years of losses, and blown accounts to start making money off the market. BUT WHY DID I START BY LOSING? Why is it working only now? And not 4/5 years ago? So, According to those youtubers and bloggers and financial advisors, etc , someone who has spent 10 years of his younger life perfecting his craft to become a designer, became all of a sudden impatient? All of a sudden developed the wrong mindset about learning a skill? I know myself enough and with all due respect I am saying bs. These bloggers/profitable traders/judges of character are underestimating people (beginners). I mean, I am 100% accountable for my losses but How is it my fault for being the product of a flawed environment in the first place?
First of all let’s agree on something … THE MARKETS NEED AND WILL ALWAYS HAVE LOSERS. Hell, I need you lot to lose so i can make money right? Good! I’m glad we can agree on that already. However, I remember when I got introduced to binary trading in 2013, the % of losers on IQ Option was around the 68% mark. I was not a trader back then, but my friend was. Fast forward 8 years later today, brokers and prop firms, cap the percentage of losers at 80%. I mean, these guys go as far as saying that it goes up to 95%.
My question is simple, even if we need losers in the markets, How did we go from 68% to 95% in 8 years? And despite such catastrophic numbers, people are still coming into the financial market everyday, and for what? just to increase those stats. What’s going on?
I think the issue is more psychological first than it is practical.
Here are my thoughts:
I - Toxic mainstream propaganda
The propaganda of trading, has gotten out of hand because of social media. The wrong message is being sent out and it is influencing everyone in obviously the wrong way, from youngs kids to retired seniors. In a society where people swim in debts, have bills to pay, kids to take care of, and other responsibilities, everyone is looking for an escape. They even have a name for it: “Financial Freedom”. So, when these people are being marketed and promised lavish things and luxurious lives through trading courses and strategies, what mindset do you possibly think they will develop going in to the markets?
No other discipline is considered to give you financial freedom through shortcuts like trading does, not medical, not law, not computer science, NOT EVEN GAMING. One of the best call of duty gamer; “Aydan”, spends in average 8 hours per day playing video games and makes $100k/year. Yes Video games!!! Video f’ing games. But over here, we are being advertised by some guru that a tougher discipline like Trading, only requires you to have a simple trading strategy that will magically make you £1000 per day and give you financial freedom if you simply follow the rules and have some basic money management. Does that make sense to you? How can we psychologically take trading seriously from the get go, if it’s advertised as a shortcut for an easy way out? In case you don’t get my point, let’s say you want to be a doctor right now! To get in the medical field to become doctor, without even doing any researches we would all think « Damn that thing will take me at least 8 years to get a MD ». That instant thought we have, it’s a mentality that has been advertised about the field for years. Those stamped 8 years of study automatically scream hard work and dedication in your mind. But in trading it’s the total opposite. When you think of the trading field, the first thing you think of is money, quick strategy and getting rich. In both example one screams HARDWORK AND DEDICATION while the other screams SHORTCUTS AND EASYWORK. And yet only one of them gives « Financial Freedom » to 45% that actually commits to it. I’ll
Leave you to guess which one. The common denominator of those two, is the culture. How the state of the culture of a discipline also has a huge impact on the people’s mindset about their approach of the said discipline. And the way trading is marketed enormously lacks seriousness because the goal is to make money off the clueless naive mind.
So no! ‘Mr profitable trader blogger guy who is judging us’, it wasn’t because i wanted to become rich quick that I lost money, It’s because I got exposed and intoxicated with the idea that the culture of trading is a financial freedom paradise, through mainstream trading and its propaganda. From that day, my mindset was all about that dollars signs, and since I was a naive mind (financial market wise), I was already losing before I even placed my first trade. That’s on the culture. Not me.
II - Learning "How to trade"
1. The wrong incentive
Here is another flawed way to introduce the market to someone in my opinion. Learning « how to trade ». Unfortunately this website is also guilty of this. I am not dissing babypips, I also started here back in 2014 like most traders, so chill out and just hear me out.
During my journey, precisely sometime before my “Ah-hah” moment (early 2020), I found myself wondering; What if there was an encyclopedia of trading … how would it start? Every books, instruction manuals, recipes or whatever you’ve ever read, have a beginning. Hell, the oldest book itself has a beginning. The Bible’s first chapter, the “genesis” literally starts by saying “In the beginning” . My question was simple, would the first chapter of the encyclopedia of trading be “How to trade”?
Let’s explore it, in the least complex way possible
If 90% of people lose in the markets, who can really teach you how to trade? The logical answer is the 10% who wins. Now, if those 10% were to teach us how to trade, would we be profitable? I mean surely we would. They are the winners, they can just teach us what they look for in the market, give us their strategy, we apply it and boom we are profitable right? It should be that straightforward. But yet and still IT ISN’T.
Some of you (us) here have tried hundreds of strategies, listened to thousands of podcast and watched hundreds of thousands hours of youtube videos, followed the system of legit winners, the ones who actually show you their myfxbook portfolios (Astrofx or Wicksdontlie), all of that, and you are still neither satisfied nor profitable. And flashnews we still have 90% of losers in the market. So no, “how to trade” will not be the first chapter or the beginning of the encyclopedia of trading, why? because, no one can teach you how to trade and thinking like that changed my approach for the better. (I already see tomatoes flying my way).
It is not a perfect science. You can teach Maths, but you can’t teach Art. And just like Art, everyone has its own view, or own way tof viewing the market. You can receive guidance for it but you can not be taught it. That’s what makes it such a beautiful domain in my opinion. I mean why do you think we talk about market sentiments? Doesn’t that mean an exchange of emotions? So how exactly do you expect someone to teach you about how to see and feel? They Can’t. They can guide your sight but only you can understand your emotions because that’s what does the trades. Every chart and candle stick patterns you will read here on Babypips is a good attempt at giving you some 20/20 vision of the market. Useful, however none of it will make you money, what will is how you use that information based on your emotions when you face the markets. And no one can teach you that. Alex Nekritin author of Naked Forex said it best and I couldn’t agree more: "I failed because [his] trading system didn’t fit with my view of the markets […] Your job is to find how you should be trading and trade what makes sense to you"
Sidenote: I read this book back in 2017, but its in 2018 that this paragraph made perfect sense to me, made me understand that I was not dumb like I thought and literally changed my life. At that time I was trading the NNFX algorithm (if you heard of it), Which imo is one of the best strategies I’ve come across the internet. However I was struggling with it, because it did not make sense TO ME but i couldn’t understand why it was bothering me so much despite the strategy working. I was just following it blindly, making profits, but it was uncomfortable for me to trade that way. I later realised that my issue was, i wanted to understand why the strategy was right 80% of the time, but was conditioning me to only take ATR profits, missing out on bigger pieces of the pie. I wanted to understand what was it that the indicators was so seeing, that I couldn’t. I wanted to be ahead of the indicators.
Oh I’m still losing on ETHEREUM God Damn
Now that being said, please let’s be clear, I am not against the term “how to trade”. Learning how to trade is definitely a vital part of the trading journey, but it’s not the starting point of your journey, especially in today’s trading atmosphere, as mentioned in bullet 1 above. In an industry where the culture is based on promises of luxury magically unfolding on your lap once your learn “how to trade”, The term doesn’t register as intended anymore. The mind of the beginner is so used and so familiar with the toxic culture of lux injected by the mainstream trading propaganda that, the incentive behind “How to trade” isn’t about "educate yourself" anymore but it is associated to "Learn how to Make money fast" … That’s where that term starts to become a problem, because its telling us, we can skip steps. That’s how we create losers, that’s why 90% of traders jump in the market in hopes to make money with goals to pay their bills and clear out their debts, instead of spending time in gaining the knowledge on the markets. Disassociating your trading journey from your personal financial life is important to become profitable in the long run. I will develop more on it, please keep up with me a bit longer
2. The Dogmatism of How to trade
The way “Learning how to trade” is structured, is telling people that trading is an automatism. Well I guess it is if we talk about trading systems and strategies sure, but I am talking more about “The way you view” the market. That shouldn’t be an automatism. The market is an adaptative environment that changes and morphs, therefore you should adapt to it too. We are being taught tips and tricks and tools that exist since before We even knew about the financial market (Don’t get me started on the RSI and Bolinger bands, please don’t ). You really think the markets haven’t gotten used to those tricks over time? We are living in the most advanced technological era ever, you really think you will beat some Institutional algorithm because you spot a divergence on you RSI? I guess you can win the battle, but good luck winning the war. My point is, while the market goes forward and quickly adapts itself, we are stuck with learning the same Support and resistance concept, Candle stick and chart patterns, animal strategies and whatever, and they just do not work anymore. How many times have you seen a head and shoulder that you just knew would work (because of dogmatism) but the market showed you who was the real boss and f***d you over? How many times you spot divergence on your RSI, took a sell position but the market went up showing you another divergence? If it never happen to you please do me a favor and Go read about the “Tweezer tops and bottoms” Candle stick patterns, then go on your chart right now, and tell me if it works. It was working in 2015 I guarantee you that. I used to use it. But now it’s completely, immensely and utterly useless. Let’s face it. The way we learn how to trade can be effective, I am not disputing that, but it is also old. So old that I can sit here and give you the typical structure of any “learn how to trade” course you will find online, and so is 90% of people. The dogmatism of how to trade is a double edged sword, and unfortunately it kills now, more and faster than it helps you win.
III - The “Winning the market” mentality
I’ve heard this term so many times. Why do people think you can win the market? Why do you tell these beginners, that X or Y strategy or patterns will help us win the market. Forbes “Renown Professional trader” Greg Secker from Learn To trade academy, often mentions it … “The 5-3-1 strategy, a set of rules that will help you win the markets” … I mean i am sorry its true i am nowhere close to his years of trading experience, but that term seems so WRONG now that i know far better. Very wrong. Not wrong to use, but wrong until interpretation when talking about the markets. Especially if said to a beginner who doesn’t comprehend the context. For years i’ve beaten myself, thinking remembering X or Y chart patterns, will help me win the market, and by winning the market i mean Beat the market, Outplay the market, win every trades, using 88% win rate strategies. I legitimately thought that if i could have a strategy that gives me at least a 60% win rate i will always be profitable. Why? because i inadvertently associated the wins I saw from gurus to the meaning behind winning the markets. Many of my friend traders fell for that stuff; their 6 figures accounts, their 15 wins in a row, barely any losses, their advertisement of their killer strategies - All of that in my head, I was here thinking I needed to be winning the market just like that, just like them, at their pace. Therefore every single time I was having 5-6 losses in a row, you know what i did? i either switched strategies because My confidence level and knowledge of the market was so low that I never stuck to one or even worse I thought i was stupid and a failure for not being as intelligent as those guys, since I either couldn’t come up with a 88% win rate strategy like them, or I couldn’t win 11-15 trades in a row like them using their strategies. It took me years to understand that strategies win rate ain’t synonym of Account growth. It took me years to realize that their strategies is THEIRS because they went through the trenches and I will never trade it as well as them, It took me years to understand that winning the market is another marketing juicy word that intoxicated my brain. And I had flush all of that out. So dear beginners, understand this … “You will not win the markets” as they say. Thinking you can, will rush you into all the tribulations that comes with being a debutant, IMPATIENCE, GREEDINESS, FOMO, UNABLE TO MANAGE YOUR RISKS, AFRAID OF THE RED, OVER LEVERAGING, etc and you feel stuck … How many of you don’t recognise themselves in this?
Your winning mentality shouldn’t be channeled towards the numbers you dream to make on the market, or the numbers you see others make. Your winning mentality should be focused on UNDERSTANDING THE MARKETS
All that being said how can we do better so that future generations of traders help us reduce those stats? You ask …
You don’t pay attention if you don’t know the answer by now: “Understand the market”. Not understand how to trade, no! Understand how the markets work. Know the difference between learning how to trade and learning how the market actually works.
If i ask 10 people randomly, why do you think the market moves the way it moves, 100% will say “because of supply and demand” … Nice, good culture of dogmatism. Now if I ask them, can you tell me, when is that supply/demand gonna kick in, how far that supply/demand is gonna go to, who are you supplying to? Who are you demanding from? How do you know you trades will go into profit when you place your market order? Which player controls it? Watch how that percentage drops considerably, and just like that they became the 90%. Remember the Encyclopedia of Trading i mentioned earlier? I strongly believe that “How does the market works” would be the first chapter of this encyclopedia analogy, going forward. That should be the marketing term for trading advertisements. That’s how we turn this culture from toxicity to seriousness. And here is why:
It clears out the noise. No money involved, no strategies, no nothing, just pure learning of why the market moves the way it moves. Why do we have uptrends, why do we have downtrends, when the market consolidates what does it mean. I have literally found myself, replying past data and just sit there to watch the market play without interacting with it. Just that letting that stuff sink in. It opens your eyes, it makes you understand and digest market habits
It makes you understand, all the teachings about how to trade much faster. I can sit here and ask 10 people here to put a support/resistance on a chart. not only those ten people will trace a line, they will trace it differently at different price points, but most of them won’t even know why those levels are important, and No! No! No! it’s not because that area has been hit 7 times (or whatever they tell us these days), and more importantly, they won’t know for sure whether the market will reject or break it next time it gets to those levels. Learning How the market works clears that out for you. Understanding how the market works will teach you why that resistance area is likely or unlikely to be broken. Over time, it will even show you that you don’t even need to put a trend line to see what the market is doing or tries to achieve.
It will download and install a software called “patience” in your brain BY FORCE. You will have no choice but to wait, for THE RIGHT OPPORTUNITY. not a pattern, not fibonacci, not a bird flying across the chart. No! the right time, the right price and the right opportunity. This will naturally teach you how to not lose money (I will write a separate post about this)
Most importantly it will make you see the market for yourself, be more confident, stray away from the dogmatism taught in “how to trade” and MOST IMPORTANTLY how to adapt QUICK because YOU UNDERSTAND WHAT IS GOING ON, just by looking at the price the volume and the overall market conditions. No gurus strategies, no trading systems downloaded from the internet. just pure you. I guarantee you you will lose less, and slowly but surely, you will be the 0.0001% who is not losing anymore. Losing a trade won’t break your heart as much. You will likely lose a trade because you entered too early rather than because the market completely went sideways on you. And I promise you if the market goes sideways on you, you will instinctively know what to do.
Side note: I’m in profit on ethereum
- And finally Learning how the market works will teach you how to trade what makes sense to YOU. and this last one is what will make you profitable, or will grow your account considerably.
I am not joking. The ethereum trade Im currently in is from a 10$ demo account, No chart patterns, no nothing, Just basic market conditions, players and time control and volume. Turned it to $1500 in one week, trading crypto, forex and commodities because i was trying to prove this point to some other trader friends who are also very invested in this topic. I will try the same thing this week with a real account
Trading is not about a chart pattern, a fibonacci level, a trend line, or whatever. Those are tools that are good to have in your arsenal, but i dont think thats what makes you a winner. The stuff I see online makes me feel so bad for new traders. There are people who literally open entire ZOOs to trade the market. Talking about, “Horse pattern” time to buy … I laughed so hard, it made me sad cuz it reminded me that there was a time when i was trying my hardest to remember these stuff from gurus. And We wonder why we keep losing.
DO you imagine a guy on the Barclays bank Trading floor, shouting to everyone “Guys !!! Horse pattern on GBPUSD, everyone go looooong” … Do you really think that’s what happens when the big boys trade? why are they feeding that to us? Lol anyway, what do i know? If it ain’t broke don’t fix right? Oh wait 90% losers … yh it’s definitely broken lets try and fix it
After saying all of that here is one thing that you need to know. Learning how the market works, IS BORING. IS LONELY. IS TIME CONSUMING, and is a NEEDY B-word. You will have to dedicate hours of reading, and backtest, to flush out the toxicity that comes with our industry before you even understand what’s going on. Because it’s not something that gives you immediate results like “How to trade”. You see, “how to trade” will tell you when you see a head and shoulder doing X it means you need to do Y. Learning how the market works will tell you which timeframe controls the market where you saw that head and shoulders, and whether or not it’s worth taking it on the price you want to take it at the time you want to take it. Market conditions, Market Cycles, Seasons, Timeframe liquidity, price, volume, bid, ask, value, The best intraday timeframe, which timeframe initiate the trend, which timeframe controls it, there is so much, but you have to be open to dig deep, i meann deeepper than the simpler stuff that’s advertised online, if you want to learn this skill for life imo.
Guys i can go on and on, cuz i am really passionate about this discipline, but i need to wrap this up. The key points from this rant are:
- if you are currently losing I do not believe it’s entirely your fault. Although you should be held accountable for your losses, You likely came into trading being brain damaged and intoxicated, by the current culture, which didn’t help either. It’s not going to be easy to get out of it but as long as you are willing to recognize those flaws, you will get out of it, so do not think you are dumb, or a failure or none of that, don’t give up.
- Chart patterns, candle stick patterns, Fibs and most of the tricks we learnt when we “learn how to trade” are tools to help us attack the enemy (the market), but it doesn’t mean you know the enemy. We can not go to war with machetes, axes and knives and expect to be victorious against an enemy you don’t even know and who will come at you with M4’s, AK’s, PKM’s and Mac 10’s every single time. Learning how and when to use your tools against the enemy doesn’t mean you know him. Plus, You are likely going to forget how to use them against the enemy when the time comes because The market can be one hell of a trickster and its scary, it will go at your emotions, then your pockets and repeat the cycle with no remorse. So take extensive time to learn to know it, and learn to use it (Rule 3 - 48 laws of power)
- Finally trading is not a hobby, is a profession, like plumbing, or electrician, like lawyer, or any other profession you may try to get into. It’s not because you know how to fix a lightbulb, and you know 2 or 3 things about watts and intensity, that it makes you an electrician now does it. Exactly, So go pick any old books about the markets you can find and read them, Put time into it, and STAY AWAY FROM ANY GURUS AND THEIR COURSES AND STRATEGIES
Sidenote: I’m about to hit my target on Ethereum … Thiayyyyy
Please let’s discuss this peacefully, i am really interested to know your opinions, and hopefully we can help some beginners out there, change the way they view trading. But before I go, please can you take part on this poll, for a study i am doing on this topic. That’ll be highly appreciated
- For all of you who have learnt “how to trade”, whether its here on babypips or elsewhere, can you say you are profitable
- Somewhat, It’s 50/50
- Based on your current knowledge about trading, how comfortable and confident are you taking trades
- I’m not sure
- I am confident
- My heart is racing a lot
- I get scared when i am in drawdown
- I just do as I was taught and what happens happened
- I am constantly looking at the chart to check if the trade is still going my way
- Final question. When I take trades
- I just blindly follow a strategy/system i’ve learnt from the internet
- I fully understand what is the market trying to do, before i make a move
- I recognised a pattern that I’ve learnt before and try to trade it
- I am fully confident in my stop loss and my profit target
- My stop loss is too close
- My RR is too small
- My RR is too big
- If i am in profits, I will close quick soon as the market show me signs of reversal
Sidenote: My Etherum trade literally went to profit but it missed the final target by literally a pip. A PIIIIPPPPPP. Aint that some s*** … God bless the Spreads … had to close it. let’s move onto the next trade
Thanks for reading and good trading week