HOW TO SUCCEED IN FOREX
WHERE TO START
Understanding the dynamics of the foreign exchange market is crucial for aspiring traders.
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Market Size: The forex market is the largest financial market globally, with a daily trading volume exceeding 7 trillion dollars. This vast size is primarily due to international trade, where businesses exchange currencies for their operations.
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Market Participants: The majority of the daily trading volume (81%) comes from international trade for business purposes, while the remaining 19% involves currency traders or speculators. This breakdown highlights the substantial influence of non-speculative activities on the forex market.
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Opportunity for Traders: Retail traders, constituting the 19%, have the opportunity to capitalize on the price fluctuations in the currency market. By being informed and educated, retail traders can position themselves to extract profits from the movements created by the majority involved in international trade.
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Informed vs. Uninformed Traders: The informed and educated traders have the potential to take a significant portion of the market share, while less informed or uninformed retail traders may contribute to replenishing the money flow. Being part of the informed minority is essential for success in the forex market.
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Unique Position of Retail Traders: Retail traders, despite being a minority, have the advantage of being able to operate independently and take advantage of market inefficiencies. While international businesses may not always prioritize optimal entry and exit points, retail traders can focus on making well-informed trading decisions.
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Knowledge and Education: Successful trading requires knowledge of market fundamentals, technical analysis, risk management, and a disciplined approach.
TRADING FACTS
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90:90:90 Rule: The rule highlights a common statistic in trading, where 90% of traders lose 90% of their trading accounts within the first 90 days of trading. This emphasizes the challenges faced by many retail traders in the early stages of their trading journey.
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Need for a Trader's Mindset: The analogy of bringing an old skill set into a new profession emphasizes the need for a mindset shift when transitioning to trading. Successful trading requires a unique set of skills and a mindset tailored to the uncertainties and probabilities inherent in the financial markets.
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Probability-Based Thinking: Professional traders understand that outsmarting the market is impossible, and they operate with a mindset focused on probability. This means acknowledging that the outcome of any individual trade is unknown, but over a series of trades, they trust in their strategy's edge to achieve profitability.
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Developing the Trader's Mindset: To develop a trader's mindset, it's essential to know your numbers. This involves setting clear financial goals, determining your risk per trade, understanding your strategy's win ratio, establishing a risk-to-reward ratio, and defining the number of trades you need to place per week or month.
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Crystal Clear Goals: Defining a clear financial goal helps traders create a roadmap for their trading journey. Knowing your target, whether it's replacing your day job income or building wealth, provides a sense of direction.
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Risk Management: Understanding and implementing risk management principles, such as determining the risk per trade and maintaining a favorable risk-to-reward ratio, are critical components of a trader's success. This helps in preserving capital and managing losses.
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Selective Trading: Recognizing that you don't need to take every trade and that not every trade needs to be a winner is a powerful realization. This selective approach allows traders to focus on high-probability setups and avoid falling into the traps of fear and greed.
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Emotional Control: Developing a trader's mindset involves locking away emotions such as fear and greed. This emotional control is essential for making rational and disciplined trading decisions.
SUCCESS INGRIDIENTS
Identify the winners in the market and copy their business model.
Set your goals & know your numbers
(Risk per trade, Risk to Reward Ratio, # of trades)
Understand your strategy, backtest it to the full, and own it.
Trading is your business and treat it like one.
Before a trader, you are a risk manager.
Learning FOREX is like learning a new language, It will take time to master, it is not a get rich quick. Anything with a big reward comes at a cost and will need your dedication and commitment.
Understand the success path, it is not always a straight line. Two steps forward one step back.
Get a Mentor, invest in learning, a lot of people say I am going to learn it by myself to save money, but they are forgetting they will be wasting a lot of money and time.
Invest in your education, cut your learning curve, and learn from your mentor's mistakes.
Your goal is to make money, you don't have to invent the wheel, learn it from a mentor, and replicate what they do.
