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  1. Unrealistic Expectations

Most Traders are lured into the market by promises of gaining financial freedom quick and without effort. These traders think that they are simply going to purchase a system where all they have to do is follow the signals and they will become rich. While this is very appealing, it follows the same premise that if it looks too good to be true then it probably is.

The Reality: While you can make a great deal of money relatively quickly trading the markets, you will only do so by understanding the real business model behind the facade of the chart and trading by its rules.


  1. The Trader’s Prison

Most Traders never make the turn into profitability when trading due to this common pitfall. We call it the Trader’s Prison.

The Trader’s prison shows how a trader can become caught up in a never ending cycle of system development. The main reason this happens is due to all the misinformation out there given to and accepted by new traders. They are taught that in order to succeed in the financial markets they need to develop a trading system that works for them and their personality. The trader will then develop their system within the same parameters that almost every other trader uses, price averages, general support and resistance, price patterns and supply and demand (aka over bought and over sold). They are then taught to formulate rules around their system that they are to strictly follow. They believe that this is what will create predictability and consistency in their trading.


The Reality: These traders do not understand that Smart Money purposely moves the markets within different cycles. The general terms used by retail traders to describe these markets is trending and ranging. Once the majority of traders calibrate their system to fit the current market environment Smart Money will intentionally change the market cycle so their business can operate at its maximum profitability level. This will in turn make most of all the retail trading systems lose money in the new coming market condition. This will then force these outside traders back into system development and put them into a never ending cycle that is emotionally and financially draining. Not to mention a total waste of time.


  1. Reliance On Others For Trading Ideas

There are an overwhelmingly huge number of trader who subscribe to trading signal services designed to send you signals when you should buy or sell a given market. The traders that go down this path still fall under the 95% failure rate and for the most part never make sustainable money. Why is this?

The Reality: These traders never make it due to two reasons.

Reason 1- When you do not do your own homework on the market you are trading you lose touch with the pulse of the market and most likely will not be able to carry through the confidence needed to manage the trade into profitability and exit the trade in a repeatable and sound way.

Reason 2- The signal you are getting was probably formulated by someone who is no better at reading the market than you are and they have most likely designed the system they are trading with complete ignorance to the real business model of the market. The business model that turns the 95% chance of failure into a 95% chance of success.


  1. Bad Money Management Habits

Traders trade more money than their current skill is qualified to deal with. They increase their lot size when they are winning (which is ok). When they are losing they still increase their lot size to make up for past losses.

The Reality: Even if you have the money to fund a hefty trading account, you cannot buy skills. Skills are earned. Someone who is trading $100 per pip without proven consistency is a worse trader than someone who is trading $0.10 per pip that has proven consistency in their trading. The big difference is the educational cost of the person who will not put in the discipline of building or funding an account based on skill and consistency. It will potentially cost them thousands of unnecessary dollars learning that there trading account size has nothing to do with making a sustainable living trading Forex until their skill is proven.


  1. Not Understanding What Force Is Really Behind The Market

Most people look at the trading screen as if it is them against price. The believe by incorporating different indicators and algorithms into their trading decisions it will allow them to effectively navigate the market and make huge amounts of money trading. They believe that the markets are price driven by supply and demand only and that anyone who is disciplined enough to follow a rules based system can make money in the markets.

The Reality: The markets are belief driven and there for the benefit of a very few who are versed in reading beliefs in the market. Think about it for a second. If you are a trader and are looking to enter a trade, you will not enter that trade until something happens, a belief is born in you that the trade you are entering will WIN. You will not place a trade if you think you will lose. This is true for every person trading the financial markets. 95% of retail traders make their trading decisions based on a belief created by technical indicators or fundamental reasons and 95% of them lose money. This leads to the fact the real edge in trading the market is not found in being an expert in reading technical indicators but becoming an expert in reading beliefs in the market. When you can read the beliefs behind the market you can set yourself up to profit the very same way Smart Money profits, by taking advantage of the completely predictable behavior of the 95% of traders that lose all their money.


To learn more about this type of Trading Methodology call and ask about the Pro Trader Program.


-Wade Guth

FX365i Co-founder

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