12-31-09
5:14a GMT – No signal today because of the holiday, but I’ve written a long post on what it takes (and what it doesn’t take) to be a successful forex trader. I hope you read the whole piece, as I think you will benefit from it, and share your thoughts and feelings at the end. Reflect on what you learned in 2009. What you hope to do better in 2010. Anything. God bless.
New Year’s resolutions. Every year millions upon millions of people make them. Then, every year, 95% of people fail to achieve them. Want to guess what the failure rate for aspiring forex traders is their first year? Roughly 95%.
Coincidence? I think not. You see the same things that make it hard to achieve one’s general resolutions (e.g. lose weight, start working out, eat healthier, etc.) make it hard to succeed at forex. To lose weight it takes discipline! You have to come up with a plan. With specific goals so you know if you are achieving that plan. And, more important than anything, you have to wake up every morning and stick to that plan. There will be times when you want to get off of it. You’ll think “just this once it will be OK not work out or eat this junk food. There is always tomorrow!” The same applies with forex! If you don’t have a specific plan with every trade, every day then you will fail in the long-term and be just another of the 95% that couldn’t make it.
Too many traders have a false dream of succees, whether they know it or not. In it they have the envy of their friends, family and all. They have done something others can not – conquered the markets. Quit their dayjob. Mastered complex financial instruments. Wall Street? Who needs it – you can earn hundreds of dollars every day as you sip coffee and click your mouse. Friends are envious and everyone talks about how lucky you are to be so smart and to have such a nice life. You can wake up when you want, follow your own schedule and answer to nobody.
Are those things possible? Yes. Unfortunately you will never achieve them until they are completely purged from your head.
In this post I’ll dive into what I think should be in you head everytime you sit down to trade. And, more important, what should not be in there.
What should you be thinking about?
Everytime you go into a trade you need to know first: how much can lose on this trade? If things go south, which they inevitably will with some trades, how much of a dent will it put in your equity? Second, what are your odds this will go in your direction? You should know from months of demo-trading, months of journalling and revisiting your trades that this particular setup you are thinking of entering will yield a reasonable chance of success. If you are just guessing, or going off of “gut feeling” you will lose in the long-term. And only then should you consider how much you could possibly profit on a trade.
I see traders come in here all the time with high hopes, eager to make 50 trades a day and tell their family how great they are doing. It doesn’t work that way.
So, to any beginners out there let me clear some myths up for you:
1) forex is not a get-rich quick system. In fact, if you have that attitude I prefer to refer to it as a “get poor system”. With no trading plan you will have the same odds of going to your local casino and wagering all your money on the roulette table.
2) there is no system that will do it for you - Any sales pitch that promises you can turn your computer “into a cash register with no trading knowledge” is a lying to you. Straight-up there is never any truth to those scams. If that was the case they would take out a loan, borrow money from friends and buy as many lots as they could and instantly become billionaires.
3) A PROFITABLE trade is not always a GOOD trade, and a LOSING trade is not always a BAD trade. Hard lesson to learn. Trading is about probabilities and long-term success. Think about this: you have a trade setup has a 70% chance of being a profitable trade, and the money management is sound. Sounds like a good setup, right? It is! But what about those 3 out of 10 trades that are not profitable? Are those bad trades? No! Losses are a part of the game in forex. You just have to know your system, know how many losses you can take and be able to be confident in that 70% success rate.
4) Consistency, discipline and knowledge are not optional. Without a consistent, systematic approach to your trading plan you will never know if a trade has a 70% success rate or a 10% chance. You will be taking stabs in the dark, reacting to the your latest trade emotionally based solely on whether it was profitable that time, not whether it is high-probability trade in the long-term.
Think of it this way:
You are competing against the best of the best. Imagine you walk into a professional football game (soccer for my fellow americans). Would you bet the professional player standing next to you that you could kick harder then him? Or faster? Or with more accuracy? No! He plays football for a living. He practices every day, kicking, passing, heading. He knows if he does a ball fake you’ll jump and he can blow by you. It is no different in forex. You are competing with professional traders who want nothing more than to separate you from your hard-earned cash.
Until you can confidently answer questions about the historical probability of your success on a trade setup, your money management and how much you can lose/win on each trade you take then, in my opinion, you might as well be betting in a casino. And in casino the house always wins.
Sound bleak yet? I’m hoping it does, because that was my goal. But don’t hang it up quite yet, because it will soon be the New Year, and there is still hope!
Your goal is to do what 95% of the other forex traders are not doing so you can become the 1 in 20 that succeeds.
That means studying. Getting books and learning the markets. That means keeping a journal, every trade you do, revisiting those trades at month-end and being honest with yourself about the pros/cons of that trade. Participating here at PipHut. Talking to other traders. And above all – being honest with yourself.
I’ve tried at PipHut to roll out tools that can help you achieve that success:
1) first and foremost – the free daily signals at PipHut.com. You know, what you would be reading right now if it weren’t a holiday!
2) Candlestick Alerts – this is such a powerful service and has taken off in popularity. But a tool is only as good as you the user who yields it.
3) Forums - here you can post your own charts, start a journal, talk about anything forex related.
and more.
And there are more exciting things to come in 2010, things that I know will help you – things like specific entry/exit signals, signals for more pairs like the AUDUSD, GBPUSD and more – but don’t let that distract you from what should be your main New Year’s resolution in 2010 – to improving consistency, discipline and knowledge of forex. And if you can do those things you WILL be a successful forex trader.
If you’ve been trading forex for over 1 year then you have already beat the odds! Now it is time to take your trading to the next level, and I look forward to helping you get there in 2010.
Have a happy and safe New Year from PipHut!
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December 31, 2009 at 07:21
Thank you Mark, For the eye opener. I copied and pasted that on my journal here at the house. I do have one question before I go for a 3 day vacation. What is “Heading” in football mean;) You are a great inspiration to me and my goals. I really want to be that 1 out of 20……:)
December 31, 2009 at 07:34
football in the international sense (aka soccer). Speaking of american footall, congrats to the Cards for clinching their division!
December 31, 2009 at 08:21
Thanks Mark, they did better this year than the last. BTW, I cannot thank you enough for what you do here at Piphut. You and the members are the best. I look forward to growing our friendships and learning together. I think having a community like this where people don’t bash others and show actual true concern in each others success is very important for me and I am sure for most everyone else here for that matter. Let 2010 be a great year for you and this community.
December 31, 2009 at 07:23
hello..thanks for your signal..its really2 help for newbies..keep continuing your good job..
thanks again..
December 31, 2009 at 07:32
Mark,
You are a wonderful person for doing what you do. Sound principles and great practices are something that we all need to be reminded of. I wish you the best of years and would love to be able to send a few pips your way if I could. Thanks for all your hard work.
December 31, 2009 at 07:34
Hi Mark,
I have learned lots of good things from your website. Your trading tips are great. Thank you.
I have also linked this article into my blog so my others friends also can benefit your writing.
Happy New Year to you and Thanks again.
Cheers,
Mike PS
December 31, 2009 at 07:42
Hi Mark
Thanks for this good insight — you must post it somewhere else for permanent reference. If I may add Mark, over confidence is a killer.
Hi Matt
Heading is to play the ball with your head (I think) :)
We’ll talk again in 2010 .. have a good one!!
December 31, 2009 at 08:26
either that or heading down the field:) Hendrik I have to give you kudos to. You seem like a cool person that seems to want to help people out as well. I hope you and I can get to be good online friends no matter what the distance between us, (or even oceans for that matter).
P.S The oceans part scares me because I’m fat and can’t swim well. lol:)
December 31, 2009 at 07:53
Great advice there and so true. I did all the wrong things at first – didn’t have a clue about anything. But I kept at it, kept a log of what I was doing and studied as much as I could – I’m still learning.
Some advice from me – learning on a dummy account is ok-ish, but nothing beats the heart-stopping moments when you trade live. Therefore I traded live as I’ve been learning, but with micro-lots, buying just 1000 units, or 500, or sometimes even less. The aim was not to make money, but rather not to lose it, gain pips and gain experience. Yes I lost at the start, but a start pot of $100 and a loss of 2% only means a $2 loss. The max I could lose was $100.
I’ve now done about 2 years of trading and have learned so much. Even now I’m learning – just today I learned something I didn’t know before.
I never sweat the pips left on the table – never. If I’m 1 pip up in the day, I’m in front. But I really look at it over a weeks period, not a day. Everyone trades different – I was sick of looking for the Holy Grail (it doesn’t exist) and now trade just with candlesticks, support and resistance and trade breaks of those. Wonderful and simple with around 80% accuracy to get my TP targets.
Sounds simple but coming with that is the background of countless hours learning money management (THE MOST IMPORTANT ELEMENT OF YOUR SYSTEM), candlestick patterns, identifying S&R, learning, understanding and trying all the indicators, watching news effect on prices, trying different platforms, analysing where I went wrong on trades, defining my trading plan to suit my style, analysing what happens during different trading sessions to different pairs at different times, etc, etc, etc.
Yep, around 2 years of it. You don’t get a Uni degree in 2 months and neither can you learn forex in that period.
Hope we all have some great pips in 2010 and thanks to Piphut we now have tools and advice to help to make it happen.
December 31, 2009 at 08:03
Hi Mark,
First of all, thank you so much for the trading tips and whole lot of trading advise. It’s great for a new trader like me. Keep it coming.
One of the best sites for forex trading knowledge.
Well thanks again. Happy New Year !
December 31, 2009 at 09:11
People are attracted to the fact that a huge percentage of millionaires in the world are born in the trading world. Though that itself is not wrong, we tend to forget that outside of the pool of millionaires that were made, a lot more were made poorer. Without a proper trading strategy and strict money management discipline, we are bound to fail.
I strongly believe that to earn some serious dough, one would have to invest first, and the first step should be on books or courses. It’s nice having signals and probably entry and exit points in the future from Mark, but the fact remains that one should learn to fish himself and not just getting spoon fed forever. Moreover, the better everyone here gets educated, the more idea and strategies we can share. We are lucky to have such a group of traders all gathered here exchanging trading tips.
Thanks Mark for the site and everyone for the company and trading ideas :) Lets get ready for a new trading year, and may all of us reach new heights this year.
Happy New Year everyone!
December 31, 2009 at 09:50
great to have a community like this to share thoughts and progress, I never thought of the 95% in the way you presented it today but it correlates, thanks so much for your help.
December 31, 2009 at 11:07
Mark, you are a Superstar! Thank you for your site and all the services you provide through it.
This article is excellent and says it all, it tells the truth about trading Forex that a lot of newbies tend to ignore. It’s not a way to get rich quick and to make a success of this business it take HARD HARD HARD work and discipline….. lots of both.
Think about it logically, for a bit of fun let’s take a highly paid profession as a comparison. A plastic surgeon can earn around $250,000 a year which is a nice income but he will have to train for around 8 years to achieve that amount!
If you are aiming to earn that much or more from trading Forex then it stands to reason that you are going to have to do some serious training and studying to get there, and that takes time, commitment and discipline.
Studying the markets is a full time commitment, there’s no such thing as a free lunch in this world and to make a good living in this business you will have to work hard and have the discipline of a Warrior. You’ll need to continually study the markets and also have the money to lose.
Phil mentions he’s been trading for 2 years and I believe that’s a good period for an apprenticeship period for trading Forex. The first year is a VERY steep learning curve; the second will start to build your confidence. The third year you should start to see your hard work starting to pay off. Don’t get me wrong, you will be in profit some of the time in the first and second year but a lot of the time it will be luck….after all you’ve got a 50/50 chance of winning any trade from day one. What we are trying to achieve as professional Forex traders is to consistently increase those odds thus returning a constant profit……and this is done with hard work and discipline.
This site will help you on your way to being a success as Mark provides his own well thought out strategies which I must say are excellent and if you use his guidance; you will save a lot of time and money.
Have I mentioned that being a successful Forex trader will take hard work and self discipline…hehe.
Anyway, wishing everyone a Fantastic New Year!!!
December 31, 2009 at 12:19
Mark..you’re a wonderful person..Happy New Year to you.
..to the Top 10 Piphutters you’ve made what Mark wanted Piphuts to be..Happy New Year guys.
..it had been a year i’ve been with Piphuts..never missed a single trading day..coz Mark’s signal gives me confidence and direction to my trading plan.
..Happy New Year to all Piphutters.
December 31, 2009 at 13:45
Mark has said it all. I wished I had come across piphut some months back when I first started, I had this idea of beign wealthy from just little equity, had a lot of indicators on my screen and could not trade and at a point thought I had found a ‘ Holy grail ‘. Now my whole trading idea and the way I see the Forex Market has changed, I no longer make trading decisions with the help of any indicator, I now use good money management and am still learning more from Mark and you guys, what a great community, let us preach the Gospel about forex in a possible we can that, ‘There is no holy grail and forex is not get-rich quick bussines’. Well the year is almost over, to Mark and other piphutters I wish everyone an increased knowledge in forex and pipful 2010.
December 31, 2009 at 13:58
Mark,
Thanks for the post because it helps one to stay grounded.
Have a happy New Years!!!
December 31, 2009 at 17:52
Mark
A fantastic posting as a starter to the new year. It is so vital to keep one’s discipline and stick to the plan. It took me a quite a while to find Piphut and I don’t know why but I can already see how it is affecting my approach to trading forex. As previous postings have stated, you seem to have a great group of people sharing their experiences and knowledge through Piphut and I look forward to being one of them.
I managed to finish the year with a little flurry (and possibly a bit of good luck) thanks to your posting yesterday. I hope we can all keep it going.
I look forward to the year ahead.
HAPPY NEW YEAR EVERYBODY WHEREVER YOU ARE. BE SAFE AND PROSPER.
December 31, 2009 at 21:00
Hi mark,
Forgive me for getting inn quite late.As far as am concern you are the holy grail for us all this 2009 and beyond for sharing your multi trillion and unequalled wealth of know how with all member(both newbies and the pros).Though am still learning but i have now realiesd on this site that forex is all about eeducation,patience and trading what you see on your chart with good understanding of chart patterb formations,good money management principle …..etc. With all this you”ve conquered all the three monsters/demons(fear,greed and anger)in forex .All the information we all need to trade forex is right on our chart and all we ever need is to see what price is currently doing and formations of chart patterns combined with your daily trading idea is enough to win a trade.Thogh,there is no gain without pain.But losses will be greatly reduce to the bearest minimal i know.The Best system, is no system.Raw price charting should be our system.You’ve turn so many traders to signal generator already through your daily education and building the confidence in them.Mark 2010 and beyond shall be our best trading year.A “no loss system” is what i want for everyone of us in 2010 and beyond.Wishing you and all the piphut a prosperous 2010.
December 31, 2009 at 21:11
Hi mark,
Forgive me for getting inn quite late.As far as am concern you are the holy grail for us all this 2009 and beyond for sharing your multi trillion and unequalled wealth of know how with all member(both newbies and the pros).Though am still learning but i have now realiesd on this site that forex is all about eeducation,patience and trading what you see on your chart with good understanding of chart pattern formations,good money management principle …..etc. With all this you”ve conquered all the three monsters/demons(fear,greed and anger)in forex .All the information we all need to trade forex is right on our chart and all we ever need is to see what price is currently doing and formations of chart patterns combined with your daily trading idea is enough to win a trade.Thogh,there is no gain without pain.But losses will be greatly reduce to the bearest minimal i know.The Best system, is no system-.Raw price charting should be our system.You’ve turn so many traders to signal generator already through your daily education and building the confidence in them.Mark 2010 and beyond shall be our best trading year.A “no loss system” is what i want for everyone of us in 2010 and beyond.Wishing you and all the piphut a prosperous 2010.
December 31, 2009 at 23:23
Happy New YEAR Mark and every one it’s 2010 in Nigeria
January 1, 2010 at 10:12
Happip New Year to all!
I have started an excel spread sheet to see how my trading goes for 2010!
Keep track and keep pippin’!
Cheers!
January 1, 2010 at 12:02
Mark,
what U ve written here is a good way to end and start a year…loads of thanx n God bless u real good.
January 1, 2010 at 22:01
MERCI DE VOS PRECIEUX CONSEILS JE TRAVAILLE SUR UN SITE DE DEMO WHS SELFINWEST .JE SUIS UN ADEPTE DU “SCALPING”
ET JE ME CONFORME A UNE DISCIPLINE ET UN MENTAL DE FER CHAQUE JOUR,EN ESSAYANT D’ETRE COHERENT
JE NE DIALOGUE PAS SUR LE FORUM CAR JE NE PARLE PAS ENCORE VOTRE LANGAGE, IL EST ENCORE TROP …TECHNIQUE POUR MOI !!!
GUY MEURIER
January 1, 2010 at 22:09
Hi Guy,
I don’t speak french but here google translated your comments to:
“THANK YOU FOR YOUR PRECIOUS ADVICE I CAN WORK ON SITE DEMO WHS SELFINWEST. I am a follower of “scalping” JE ME AND CONFORM TO A MENTAL DISCIPLINE AND EVERY DAY OF IRON IN TRYING TO BE CONSISTENT. I DO NOT DIALOGUE ON THE FORUM BECAUSE I STILL DO NOT SPEAK YOUR LANGUAGE, IT IS STILL TOO TECHNICAL FOR ME …!”
Your welcome and glad to have you here at PipHut :)
January 3, 2010 at 22:46
quelqu’un peut il m’apprendre à trouver les “vagues d’ELLIOT” pour pouvoir utiliser correctement les Bandes de BOLLINGER .MERCI par avance
GUY MEURIER
January 3, 2010 at 12:36
Thanks Mark for 2010 advices hope my discipline will improve and my trading skills also.
January 3, 2010 at 21:46
OK Mark, Now it’s just your team and mine. Packers are ahead right now though. We’ll see what happens. ;)
January 3, 2010 at 22:39
Your Packers are killing us!!!:(