Wednesday, January 23, 2019

Don’t Bother Trading Forex If You Don’t Have A Trading Plan And Not Willing To Think Long Term

Did you know that 90% of traders fail and only 10% are profitable?

If not then you’re in for a treat because I had no idea about this when I started.

I learned it the hard way, took me several accounts before I did my research and stumbled upon this shocking statistics of winners and losers.

Wonder why there’s such a big difference between the winners and the losers?

It’s all because of the wrong expectations of the people about forex trading

They thought it’s easy and doesn’t need a trading plan; they thought it’s a quick rich scheme and would give them fortune in just a short period of time.

The scenarios are always somewhat like this:
Beginner trader sees a random pin bar and traded it. The market immediately take out their tight stop loss. They got angry and emotional, want to take revenge on the market took another trade with double the leverage and still became a losing trade.


Saw a random engulfing candle and took a trade. Luckily won the trade and become over confident. Here comes a pin bar formed, took that set up and opened a trade but now with double the leverage because he came from a winning trade and he is full of confidence that's why. The result a fail set up and a losing trade. Now become emotional and try to find a new set up to get back the losing trade. While being emotionally driven, one cannot think logically and the result would be a wipe out account balance.

Most of the people just simply don’t know what they are doing. They think they know what they are doing but I’m telling you they don’t.

Perhaps they know the basics of price action like the support and resistance; maybe they know how to recognize pin bars and engulfing candles; perhaps they know how to use technical indicators like moving average, RSI, MACD and etc. But still they wonder why they are still not profitable? What’s lacking?

They failed to realize the need to integrate all of the knowledge into a trading plan/strategy for them to have an edge in the market.

The successful 10% are successful because they follow strictly a trading plan and trading strategy which gives them the edge.

Be like them, model them; apply all the things that you have learn so far: basic price action, basic use of technical indicators, fundamental factors, money management, trading psychology and create a trading strategy base on it.

The trading plan and strategy will act as your edge in the market

If the criteria in your trading plan is met that’s the only time you take a trade, if it doesn’t then standby and just do nothing. Eliminate the fear of missing out a day without executing a trade.

Don’t pressure yourself on thinking that you should always have a trade open.

By not doing anything you are actually winning.

Forex trading for me is a game of defense and not offense

Stop wasting your precious energy by trying to join all of the markets movement.

To avoid over trading, one simple solution is to wait for your set up which is based on your trading plan to show up. 

That’s the surest way to beat the market.

Use this proven and tested strategy consistently and the result will be astonishing. You will see that your account balance will gradually increase.

It takes time. Great things take time. You need to be disciplined and stick with your edge at all times. That’s what professionals do. That’s why they are called professionals because they knew it’s the only way to become profitable consistently.

 Once you have your trading plan/strategy another challenge will emerge

Do you have what it takes to strictly follow this trading plan?

There are times that the markets are quiet. No trade set ups formed in a week. Can you handle these times and still stick to your strategy?

There are times that your strategy will have setbacks and you will have consecutive losing trades. Can you handle these setbacks and not resort to finding another strategy?

There are times that you will feel your gains are quite too small which will make you think of doubling your leverage. Will you be able to maintain your money management plan?

Forex trading is not a quick rich scheme. It takes time to become profitable.

Successful traders are turtle traders. They have a steady but surely approach in the market.

We should model their mentality; We should learn how they see the big picture by taking it slow and steady.

To give you an idea, here’s how most of the professionals think when they say long term.

Let us say that they have a 10k USD capital. What they do is they create a trading plan/strategy which aims for a certain amount of percentage gain each year. And by sticking to this plan they can predict how much they could possibly earn in a decade.

Let us assume that they have created a trading strategy that will give them 50% gain of the capital in a year which means roughly gives 4% to 5% returns every month. This is how it goes to them.
  • 1st year = 15,000 USD
  • 2nd year = 22,500 USD
  • 3rd year = 33,750 USD
  • 4th year = 50,625 USD
  • 5th year = 75,937 USD
  • 6th year = 113,906 USD
  • 7th year = 170,859 USD
  • 8th year = 256,289 USD
  • 9th year = 384,433 USD
  • 10th year = 576,650 USD
Almost 600k USD in 10 years with only 10k USD starting capital. That’s how it works to them. By following strictly a trading strategy and thinking long term one can become profitable.

We are only assuming here that we have a 10k capital with a 50% gain every year. 

What if you have a 50k capital how much could you possibly earn?

That’s why I could say that trading is a game of the wealthy to make them more wealthy. Your capital matters if you want to make big gains. 

The amount of success we are going to make is directly proportional to the amount of risk we are going to take. Be realistic on your expectations if you have a small capital.

But anyway the point here is that we should all be thinking like the professionals.
And acknowledge that majority did not succeed because they fail to recognize these two important aspects in trading which is creating a trading plan/strategy and thinking long term.

The big question now is do you have a trading plan/strategy for your long term goals?

 If not then just forget about trading because you will just loss money if you will force yourself into it. 

See you till next time my friends!

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