Market Myths
There are many people that feel the Forex market can be mastered by reading a book or taking a weekend crash course seminar. And while these things can be helpful at times, to someone with no prior market education, these people are really just fooling themselves. These are the kind of people that are likely more concerned with finding the easy road to riches with no effort on their part. The real world of trading just isn’t that simple, nor is the market forgiving to the unprepared trader. The markets sole purpose is to remove you from your money and being unprepared will only make its job easier.
Most people don't want to hear it but trading does involve a lot of concentration and focused effort towards the ultimate goal of becoming a consistently profitable forex trader. You must understand that the market is just like any other profession on the planet. To become truly successful and a leader in any industry requires advanced education, years of quality experience and an unwavering resolve to become a master in your field. Do you think Warren Buffet just walked into a 40+ billion dollars fortune? Not a chance! He clearly put in the time to develop a system that worked for him and probably had more than his fair share of failures along the road to finding his system.
Many people do have what it takes to be a success in the Forex world but lack the understanding on where or how to get stated. This is the exact reason we have created this course. Throughout our years of experience we have seen far too many traders that had some of the components needed to be a success, but still failed to become consistently profitable. Too many traders did not have the proper training, tools or support systems to help them along the way.
The following are 6 of the more common market myths that you may have heard before. We have found these myths to be particularly dangerous and quite contradictory to the reality of what really fosters trading success.
You Need a Lot of Expensive Equipment to be Successful
You DO NOT need a lot of expensive equipment to be successful at trading. In fact, starting a trading business can have one of the lowest start-up costs for any professional business we can think of. Try and think of another type of business that can provide the freedom and flexibility of trading. We can’t think of any other business that offers more opportunity to create an unlimited lifestyle of abundance for as little as a few thousand dollars.
You don't have any major overhead to worry about like employees, an office or retail location, space to store products, etc. All you need is computer or laptop, a high speed internet connection and trading software with a live funded account and you’re in business. You now have the power to compete with some of the largest and most powerful financial institutions on the planet 24 hours a day, in any market, worldwide.
Trading is a Skill that can’t be Learned
Some people truly believe that trading is a skill that can’t be learned. Nothing could be further from the truth. Trading is just like any other skill that you might acquire. You must spend time perfecting your skills through quality experience in the Forex markets. It’s not enough to just take a course and assume that you will start making large sums money from day one. You must learn to be absolutely ruthless about taking your inevitable losses and learn from your trading mistakes. How else are you going to improve your performance?
Human beings learn by making mistakes. Did you read a book on how to ride a bike and then instantly ride at a professional level? No way! You fell off a couple times, adapted and learned from the experience and then steadily improved your skills by continuing to get on the bike. The same goes for trading.
Unfortunately, this profession attracts a lot of people who are looking for an easy way to get rich. Many people don’t put in a proper amount of effort and usually lose all their money before they had the chance to get good quality experience. These people generally can’t recover from these losses financially, or even worse, are left mentally and emotionally crushed by the experience.
The problem is that many people lose all their money before they have had the chance to gain the proper quality experiences that all successful traders need to get. Most of the best traders in the world will probably tell you they blew out more than one account before they finally figured out the right mixture of trading styles systems that helped propel them into trading mastery. Thankfully, you don’t have to blow out even one account to learn and develop a proper trading methodology. This course will give you all the tools you need to get started trading confidently and intelligently right out of the gate.
Averaging Down on a Losing Position Creates a Lower Cost Basis
If you are inexperienced and looking for the quickest route to disaster and trading losses then averaging down on a losing position is a historically easy way to do that. It is true you can lower your average price by averaging into a losing position but unfortunately, most traders find themselves on the wrong side of market fundamentals and averaging against the fundamentals is a recipe for disaster.
Most retail traders learn about technical analysis first and never really get to the fundamental picture. The thought is that fundamentals are difficult or require an economics degree. This is not true. In the Forex market, fundamental analysis is the art of following central banks. Most central banks will tell you what they are focussing on and that’s all we need to focus on. Never bet against a central bank as they are the biggest traders on the planet.
One of the worst things a new trader can do is to throw good money after bad money. Your initial capital and trading profits are hard earned good money. A loss that hasn't been closed is bad money. Why would you want to throw your good money away to support a position that is hurting you both financially and emotionally? You must learn to master your emotions and take your trading losses because these losses will always be a part of the trading game for any professional trader.
Some of the best traders in the business lose money on 50% or more of their trades. You don’t have to come up with a trading strategy that makes money 100% of the time to be successful. That type of thinking is for losers. All you need to do is develop your skills and learn to hold winning trades for longer than your losing trades. In other words, your winners have to at least pay for your losers.
We have seen this time and time again and it’s absolutely shocking how many people have been trained and KNOW that averaging down on a losing position is a terrible investment approach but they just can’t help themselves and do it anyways because they can’t bring themselves to take a loss. It’s better to take a small loss now than a huge loss later that wipes you out financially and emotionally. If you take a 1% loss on a trade and after you close the trade it continues to go against you another 20%, then that is a winning trade in our book. You just saved yourself 19%! You must be a genius. You will need to learn to get over the fact that you will have losses if you ever want to have a chance at success in this business.
Losses are and have always been a part of the game for any successful trader. There is no one method that is going to work 100% of the time. You must learn to take calculated and intelligent losses to preserve your precious trading capital.
The Buy and Hold approach is the Safest Approach in the Markets
It has been said that the buy and hold approach is the safest approach to investing in the markets. This approach may have worked at some point in a prolonged bull market many years ago but it has no relevance today. With the speed of information in today’s market we have seen a dramatic increase in market volatility. This volatility can be used as a great tool for creating profits but it can also cause damaging losses if you don’t know how to harness its powers effectively.
There are so many examples of markets giving up several years of price gains in just a few short months, weeks or sometimes even minutes. Remember January 15, 2015 when the Swiss National Bank pulling the price limit on the Euro and causing 30-60% price moves in 1 minute on some currency pairs.
Markets will always fall faster than they rise. This is a basic law of gravity and it also tells us that fear is a much stronger motivator than greed. Even if you are one of the lucky ones who has made decent money with the buy and hold approach, try calculating any inflation, interest charges, account fees or currency devaluation your money was subject to and see if you really did make as much as you thought you did.
There is a Holy Grail Strategy and Successful Traders must have Found it
There is a misconception that successful traders must have found some sort of Holy Grail strategy. Well, there really is no Holy Grail. If there ever was a Holy Grail then it would be pretty obvious that someone would have discovered it by now and everyone would be doing it. A market is made up of millions of traders and investors acting on completely different views and opinions and that’s how the market functions. It's simply not possible for there to be a perfect sure fire system that will produce profits 100% of the time.
If there was such a thing as a Holy Grail it would be getting good education and quality experience, learning from making some mistakes and adjusting your well written trading plan to produce better results for you. But that isn't sexy or what sells books. Amateurs don’t want to hear that kind of talk. It’s simply not exciting enough and these people don't want to put in any of the effort required to be a successful forex trader. They want to believe these delusions because it keeps hope alive for them that they can change their situation overnight. This is why so many people play the lottery even though the odds of winning are one in multi-millions.
If you take very simple steps each and every day that push you in the direction of a bigger goal you will find these smaller achievements very exciting and addicting, especially when you start to get some real momentum behind your trading results. It’s amazing the sense of accomplishment that you can get from a few small achievements and the empowerment that you will feel from knowing that you are on your way to a life of financial success. Accomplishing a large goal starts with one small accomplishment after another. A large completed goal is really nothing more than the sum total of all your smaller accomplishments.
Trading Systems need to be Complex to be Profitable
Many people think that trading systems should be complex in order to be profitable. There are some PHDs in mathematics that can figure out incredibly complicated systems and make money with it but for the rest of us we need to focus on a more practical approach. It is possible to generate profits from complicated methods but you will increase your odds of becoming paralyzed with too much analysis. And it’s important to remember that the market is driven by human emotion and those emotions on not that complex, it's fear and greed for the most part.
There are some traders that eventually do find success with what looks like a calculation for harnessing nuclear energy, but these people are few and far between and it’s more likely they started off with a more simple approach to the markets that evolved into a complex system over time. They likely laid a foundation for success first and built on it. For the rest of us the best systems usually are the ones that are simple in their approach.
If you are familiar with Ockham’s razor it suggests that the simplest explanation is usually the best and most effective. This is very true in trading the Forex market. It becomes too overwhelming and slows you down far too much when you need to wait for dozens of different indicators to confirm each other before placing a trade. This is especially true for the beginning trader who may not understand how the indicators actually work.
Try keeping it simple until you have mastered a couple of concepts and then move on to more complex approaches. Learn to crawl before you sprint. Looking at the chart below it is easy to see how a complicated system can be overwhelming. Good luck finding a profitable trade in there.
An image of an overly complicated technical chart.
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