Is trading FX for living a myth?

here here

This whole 95% that lose money , well I have never seen any credible evidence of that statistic.. Its one of those sayings thats been around and has been perpetuated because its easy to believe.. Do majority lose money in FX, yea sure, because look at the way the majority thinks.. They think in terms of how many thousands they can earn.. Thats not proper.. newbs don't like to think in terms of %ROI, realistic %ROI at that. Everyone wants to put in 5K or 10k and expect to make a full time living at it.. NOT POSSIBLE over an extended period of time..

Plus, loosing money is a must, you must know how it feels to loose money to train yourself psychologically. Loosing is hard to do, and accept, but in our profession, I'm talking about those of us that trade full time, its part of the game. If you are afraid to lose, you will be afraid to win, simple as that. Professionals treat their losers the same way they treat their winners, they analyse it, see what could be improved, and move on to the next one. The real difference in the professional is that he/she knows that statistically he/she will be coming out on top.

I was part of the 95% too, but what would you expect of somone who into their 1st week of trading thought all you needed was the Macd crossover and trade with the momentum and average in to your losers and you'll come out on top?? But even though you start off in the 95%, any person that really studies FX trading and is disciplined, over the course of the 1st year will notice that the size of their loss is getting smaller and smaller. To me that was a positive sign, meaning I'm getting better, absorbing my education, but also realised hey I should not be thinking about making money, I should just try not to blow up my account and try to keep my losses to a minimum in % terms.. and year 2 and year 3 , it kept getting smaller and smaller, till when I finally was breaking even to eeking out a profit, and then you're just fine tuning what has been working and what else you can employ to take you over the next hurdles. And basically after another year and a half I was satisfied with the returns that I was generating to take the step of trading high equity. And right now all I care about is %ROI, never falling into the trap of how many thousands to make, thus keeping my position sizing and risk to reward constant with the increased equity.

So basically what I'm trying to say is that proper education will make you a better trader, and you will see progress, and even though you start out at the "95%" bracket, it doesn't mean you stay at that level. Now jumping into the game full time, well that also has to come from how much equity you have, and how much returns are you generating and if its enough for you to survive on. Plus the psychological part of the game, where if you will be well equipped to handle the pressure of generating returns for your livelihood. There's a reason why they say FX is a rich man's game, because the higher the equity you have, the less percent return you will have to generate to provide a good income for yourself and your family. I don't want to discuss proper equity requirements here as everyone's needs are different.

But one thing I am 100% sure of, if you don't love trading FX, you will not succeed in it. Its like being a doctor, if you really have no interest and don't love the profession, you aint graduating from med school, and the same goes with FX. You have to look past the money, the money comes automatically, you have to love what you do. Thats one thing you will find in common with all full time traders, they love what they do, and they have put in thousands of hours of time into it selflessly. They were not clockwatchers like oh ok I have to put in 2 hrs of study today in FX so lets get to it. Every full time trader I know, even on this forum, has put in full time amount of work, which means in excess of 40 hours per week for atleast 3-5 years before making the jump to full time. Now are there exceptions, sure, but thats a good rule of thumb.

Sorry for the long rant, but it just annoys me when people try to say that you can't make a full time living in FX or its impossible , etc.. Its possible, its being done, its not easy, its not cheap, its not for everyone, and not everyone has the time, money, or the passion to succeed in this business, and success doesn't come quickly either in this business, and all of this adds to the mythical "95%" rate of failure..

Ron

What can i say -Bravo

I don't know about in any other places but, in my country, forex trading just recently has wings to fly. Beginning around the turn of 2008/2009 there's a flurry of demand for laptop and modem---so much that when there's no supply at all for modem (since it was new year then) quite many seller got 50% profit of a new modem out of a secondhand ones.

Some folks said that it was because many schools, especially junior high, started to require the use of laptop and internet for study. That may be. But then Internet access started to wan around London and New York session starts. And a lot of new faces showed up in a lot of local internet forums for business---not exclusively for forex---asking around about forex trading.

And you started to hear complains. Boy, do you starts to hear them. Just say you trade forex---don't even mention it for a living---and somebody will start caution you and proceed to tell how he or she lost thousands of dollar in it. And scam victims abound in internet forums like mushroom after the rain.

So, yes, in my country, you don't have to have hard evidence to believe that 95% loose money in forex.

2008-2009, like, less than 2 years experience, of course their going to fail, and if they have the mindset that "It's an overnight success" like it appears alot from your country have... they are going to fail. And give up before they gain any real experience.

For people to jump in thinking it's a win win situation... is setting themselves up for failure.

it's as if they don't bother reading or just unable to open their minds!

Great post, I think youre spot on here!

Either that or they read the "You can become rich in no time with this EA Fa*cough*p T*cough*urb*cough*o" or other unverified "success" stories, while completely ignoring the real facts that are often found in open community forums such as this.

well said Pharoah.

there has been some great posts in this thread, i hope it's enough for people to open up a little and realize that yes, full time trading is possible. As long as you have the right mind frame and are prepared to to do the hard work for as long as it takes you to reach consistent profits.

there is no single road map we're all different and it will take each person a different amount of time, that's if you ever reach it. basically it up to you and what you put in to get to the goal!

let the journey continue

good trading.

Great post!

I couldnt say it better

Agreed. Hope the author returns it. If not, will try and recall some of its highlights:

1. not stupid -- Think. 2. not lazy -- Work. 3. not unstable -- Be cool. 4. abusive -- Don't gamble. 5. unlucky -- Prepare.
Also talked of "Coffee for Closers", what wiki calls a popular actor's monologue.
Overall feel, tough talk so would-be traders face reality.

What interested me was the 'lucky' part. It's true; you throw what study you can at the next price move, only what counts is if it works. I'm just on demo, and glad to have read it. Saves me time emoting over trades I only had a chance at getting anyhow.

I can only speak for myself, but I actually do make a living at trading. It was hard won. It took intensive study and a level of due diligence and discipline that most jobs don't require.

It is a certain breed that rises to the challenge and thrives in this environment.

So cutting the wheat from the chaff starts at the bottom. If anyone finds themselves in any one of the categories of the "people who shouldn't trade" below, then save yourself a lot of money and give up now. What I'm going to share may sound harsh, but it's not mean spirited in the least. The market is brutal and honesty is critical. Anyone giving people false hope or encouragement is doing a great disservice.

The Unspoken Rules of Trading

1. Stupid people shouldn't trade.

It takes a level of mental acuity that pushing the button for the fries doesn't. Trading is professional work and requires an aptitude for strategic thinking as well as a high level of problem solving skills. Here's a link for industry IQ averages. http://iqcomparisonsite.com/Occupations.aspx The chart includes administrative functions as well as professionals, so you need to look at the 50% mark and above. In Finance the cutoff is 110 IQ for professional work, for general employment the cutoff for professional work is 100. There is another statistical table here http://www.geocities.com/rnseitz/Definition_of_IQ.html. Remember these are minimum cutoffs, not levels of excellence. These polls are based on actual employment figures, so it isn't an opinion whether someone has what it takes, it's just reality. Do yourself a favor and take a simple IQ test online. There are plenty.

You are going up against the top minds in the world in this market, so you need to ask yourself, "Do I really have the necessary fire power?" The market isn't an equal opportunity employer, it's a predator.

2. Lazy people shouldn't trade.

It's hard work. Anyone who thinks they can cut corners are deluding themselves. The problem is most lazy people don't realize they're lazy. I don't mean the people who can't be bothered to get out of bed kind of lazy. I mean the one's who went to college, got a degree and spent their time until now being handed work to do rather then ever taking an initiative to improve upon a process, to strive for a level of excellence above the bare minimum of what was expected of them, and always sought the line of least resistance kind of lazy. Trading takes a high level of commitment, a willingness to make sacrifices, and an ability to innovate. If you've never risen to the challenge or developed these skill sets, putting large sums of money on the line is a tough way to find out you don't have them.

3. Emotionally weak or unstable people shouldn't trade.

You need to have a high degree of emotional intelligence, stability, and self awareness to make it. If you don't have the constitution for it, or haven't dealt with your emotional weaknesses they will interfere with your decision making process and you will lose. Fear, greed, ego, hope, and anger are obvious things that need to be overcome. More serious maladies will have an even greater impact so it's up to the individual to introspect if they have the emotional stamina for this profession. Trading will push every button, bring out every demon, and then some you never knew existed. If you haven't seen the "coffee's for closers" speech on youtube, it's worth watching, and if you think that's abuse, then you have no idea what you're up against.

4. Substance abusers, alcoholics shouldn't trade.

For obvious reasons besides drunk courage and nodding off for 12 hours while a trade's going with no stop loss at 500:1 leverage.

5. Unlucky people shouldn't trade.

If you've never won at anything in your life why would trading be any different? There is an underlying cause for unluckiness. I don't buy into the notion that some people are naturally lucky and others aren't. We create our own luck and lot in life. If you are a glass is half empty person, or constantly of the view that the deck is stacked against you, it will be. State of mind defines our path. Losers love to be proven right. The "see I told you, no one's a winner" types.
With that vantage point someone has already cast their own misfortune. They usually try to find like minded beings to substantiate their view so they can blame it on the system and not take personal responsibility for their own failings or correct them. Misery loves company.

Naive people don't really belong on this list, but should always trade demo first. We all have to start somewhere. So being new to something doesn't mean you are not going to make it. But heading into this with a notion that it's easy or listening to people brag about their winnings on a forum and thinking "I can do that too" is a completely false impression. I watch the Interactive threads and from half the stuff I read you'd think people are making a fortune.

This is just not true. There are a handful of good traders, but you need to understand enough about the market dynamics to know who is good at this and who is full of it or just demo trading.

Then there are the scammers. The people who shake down newbies by throwing fairy dust in their eyes. So be cautious of trading systems and signal services that sound too good to be true. They are.

No trading system will replace real knowledge. People who put their faith in a trading system will lose. You need to study from the bottom up. Candlestick patterns, chart patterns, price action, all the components that create market dynamics. If you can't understand what's happening on a naked chart, no indicator is going to help. There is no holy grail, no magic bullet.
There is only thousands of hours of chart time and studying everything you can get your hands on for technical analysis, trading psychology, and learning how the global financial market operates.

Then there's money management, risk reward, and overcoming negative expectancy. Trading is a business, not a game. It needs to be approached with a high level of professionalism. The bottom line is critical. You are the President, the Trader, the Analyst, Systems Technician, and Accountant. You have to wear each hat equally well and your business is only as strong as it's weakest link. If you have no prior experience running a business, then you need to learn. Trading is more than just placing trades.

After you've put all this together, then there's the market, which is a fickle beast. It eats the best and brightest as a snack before lunch. It's unforgiving, uncompassionate, and unrelenting. If you get cocky, or complacent, it will rip you to shreds. Even if you do everything right, sometimes you get broadsided, which is why money management is so important.

The last one's standing are the one's you're up against. And they are 10 moves ahead, have years of collective experience and inside market knowledge that retail traders don't.

No mean feat. But if you think you've got what it takes, great.

Trading is not a glamorous job. It's a boring, rote, solitary activity. You need lots of patience and to remain passionate about it at the same time. Personally, I love it. It's like playing financial chess against a thousand Kasparov's. When you get the moves right there's an indescribable satisfaction to it. Making money is the end game, but the side effects are personal improvement and self autonomy, and an in depth understanding of how the global financial system actually works. All good stuff.

Anyway, that's my take on it.

I hope some of this is useful to someone just setting out on the path.

Best of luck.

fantastic post!!!!!

I agree 100%, as a matter of fact, I've already referenced someone to it, it's the best beginners guide to the decision of entering forex as a trader or not I've ever seen.

It can be done but not by everyone...this is a serious business,few will succeed, many will fail and will be released to try something else. Its like any other profession.

forex is certainly not for everyone. it's great to see many people making a living from forex, congratulation. for those who want to become one, it will be long and probably painful (from losses i mean) process. if you're not successful, then go try something else, may be you'll be better at it...

How 'many'?

One too many?

Excellent post
Post #3 is pretty much in the heart of trading being profitable or not imho.
Excel self mastery, you'll excel in this business.

Nope, it's not a myth, I'm trading for a living.