Have you ever gotten a chance to look at the ‘lot ladder?’ I’ll bet that you have, and I’ll bet that if you are at ALL a driven person, or motivated by profit, then you probably got very excited.
Now did you ever get a chance to look at the ‘Traders Cog?’ Again, I’ll bet that if you are a motivated, driven person, you probably glanced at it and either subconsciously or consciously dismissed it a little bit. I get it, you are better than average, you have probably excelled at other endeavors in your life and usually don’t get held up by the same things ‘others’ do.
So, here’s the thing. That sequence of events may be one of the things, if not THE thing that is holding you back from where you want to go. What most student traders seem to do is to see the lot ladder, get started as a student, get really REALLY excited about all of the potential change that they are going to experience in their life, and then WHAM. Reality hits. Trading seems to be one of those things that requires a completely new skill set. It requires a technical & emotional skill set, and also happens to be something that doesn’t really care that much about how good you’ve been at anything in the past.
What happens now, is that over time, the enthusiasm wanes. Suddenly you are months and months into your trading career and you are less and less optimistic. Doubt enters the mind. The imagination starts to entertain other more ‘viable’ income options. And here in lies the GREAT MISTAKE. All the while, whether you can tell or not, your skills are improving. Amidst the doubt, you actually probably know how to trade for profit, and even if your account doesn’t say so right now, you are dangerously close to your personal breakthrough.
How do I know all this? Because it happened to me, and as special as I tend to think I am, I’m not that different from you. HOWEVER, I am making it to the other side, and I can now tell you this.
HERE is when you should start getting VERY excited about your FOREX trading.
You should start getting VERY excited about your trading when you have made it through the bottom of the ‘Traders COG.’ Because NOW, you can start your march up the ‘lot ladder,’ AND by waiting until then to start getting VERY excited, you will save yourself a lot of frustration that will NOT accelerate your learning curve.
Remember, anything that compounds in nature will accelerate over time. So while everyone else is being impatient, frustrated, disappointed, and maybe even looking for yet another shiny new thing, be the person that understands that years 3 & 4 can and will dramatically outpace years 1 & 2, AND a trader that earns 30-40 pips per week with control, scales their pips accordingly, and endures enough time, will earn remarkable returns.
Until next time, happy ‘pip’ing!
By Payton Parnegg
Here is this morning’s recap!
Here is what happened in the markets this morning.
In case you’ve been living under a rock for the last decade, technology is changing the world at a more rapid rate than ever before. For hundreds of thousands of people, the changes technology has brought has created a time of uncertainty, turmoil and desperation; and for others, a time of hope, gain & prosperity.
The age old adage, ‘when the going gets tough, the tough get going,’ has never been truer. However, as things have changed more and faster, at steeper curves of progression, many have found that their efforts of working harder has done little more for them than coming up short. If it hasn’t crossed your mind before, it may be time to look at a way to work smarter, instead of working harder. While people have been saying that phrase to me for years, I never really understood it until I was introduced to the concept of leverage.
If you are a forward thinking individual, you have crossed a time when you’ve looked at someone who has achieved high levels of financial success in their life and thought to yourself, ‘they can’t be THAT much better than me; they can’t be THAT much harder working than me.’ If you’ve thought that, I’m here to tell you that you are absolutely right. They most certainly are probably neither. What they are doing better than you though, is playing a different game. And if you ever try to race a Ferrari on a bicycle, no matter how strong you might be, that is a losing proposition.
The person who has leverage however, has found a way to earn money not based off of an exchange of their own time, but from the time of others, a business system that reaches a much bigger group than they can themselves, or by leveraging their own money. Unfortunately for most, in times of trial and tribulation, few people tend to rethink everything they know and usually try to find a higher hourly exchange for something they already have experience with or think they could do.
If you’ve been scratching your head looking for a way to beat the game you have been playing, it’s time for you to learn a skill set that can offer you massive leverage. Enter, “trading Foreign Currency”, or “the FOREX ”. Without providing an over the top education in this blog about what it is and how it all works, just understand that people buy and sell money to each other all over the world every single day. As a result, this market behaves in a certain way, and by investing your time in getting a proper education in this market, you can learn a skill set that maybe for the first time in your life, can provide you massive leverage.
Just the other night, using the methodology that I have learned as a student at the fx365 Institute, I was able to identify an economic news event before it happened (1. 00 AM PST). I set an appointment with myself to evaluate the market at that time (I jumped on about 30 minutes prior), created a trading strategy, and in about an hour from the time I opened my computer, I closed my trading station with 1 trade; a profit of 9.8 pips. Now you’re probably asking yourself what a pip is and what that means to you. A pip is an increment by which the forex market is measured in. Anytime you enter and exit a trade, your profit or loss will be measured in pips. Here is the important part: When you learn the skill set of trading, your quest for pips remains exactly the same. However, the amount of money that they are worth to you changes over time. In fact, you can assign as much or as little value to a pip as you are comfortable with or that your account margin will allow.
Recognize here that the skill set that you are learning never changes. And here is where leverage enters. That 9.8 pip trade for me on that night was worth $0.98. For many, to wake up in the middle of the night, learn something completely foreign and new, earn just shy of a dollar and to be pleased with it is laughable. The fun part however, is soon that denomination will be worth $9.80. Great, you just bought yourself lunch, maybe. Well what about $98 dollars? $98.00 for an hours’ worth of work starts to be a bit more of an entertaining proposition. What about $980.00? Could that put a dent in some of your bills each month? As you become a more competent trader, you can trade; 10 pip, a $1 pip, a $10 pip, a $100 pip and so on.
Where else can you learning a skillset that over time you could put hundreds of dollars an hour into your pocket? On top of that, a skill set that can be used from anywhere that you have a secure internet connection.
While this is only the tip of the iceberg, and of course, there comes inherent risk and fear that surrounds the financial markets, with the appropriate education and an approach similar to what one might go through to become say a licensed massage therapist, a nurse, a welder, trading the forex might just be worth a look. The fx365 institute is the only school in the world where they trade live with you every day, year round via a professional broadcast with professional traders. It’s your best bet to work smarter instead of harder.
Best of Luck!
Well it’s 2016, and another year has gone by. New Years resolutions have begun, gym memberships are sky rocketing and everyone is motivated to become more fit, drop a bad habit, pick-up a new hobby, or set new budgets. Although I have never been convinced that the dawn of a new year gives you any advantage of actually accomplishing any goal, what I do believe is that by writing out your goal on paper and establishing a date, will give you a much better chance of completing it.
One thing I have looked at for myself in the past couple years is a specific Money Management philosophy in my trading. At the end of each year, I take stock of how well (or horribly) I have traded for the year and make sure that my strategy is sound and still valid. This is an exercise I wish I learned my first day trading because it would have not only made me more money, but it would have substantially mitigated a good percent of my total losses in my first year. So what I am going to share with you now is a very simple philosophy I follow that has helped my trading massively.
The difference between a new trader and a professional trader is this: A new trader thinks about how much money they can make, while a Professional Trader thinks about how much money they can lose. Do you see the difference? The moral of this story is that trading is risky, and although it is fun to think about all of the money you could potentially make, most new traders seldom like to think about the fact that one bad day of trading can cut their account in half, or how a misunderstanding in risk reward ratio can lead to taking far greater losses than positive gains. The market doesn’t care about how much money I have, what I lose or what I win. The market itself is pure and emotionless, but is driven by the emotions and beliefs of the people who participate in it.
This allows me to have a clear advantage over most traders if I can follow these simple rules while trading:
(I will explain these concepts now)
This is very simple math and this will keep you from not only having a really bad day trading, but also helps prevent you from biting off more than you can chew. It answers a very simple question of what lot size should I be trading? Here is an Example:
If I have an account balance of $1,000, then 5% of that is $50. So, if I am trading a lot size equating to $1, then a -50 pip stop out would reduce my account by 5%. This means that the most I am ever willing to lose on any one trade is 5% of my total account. Now I am not advocating take a -50, but you get the idea. The dollar figure and lots size is proportional to your account balance.
This is the mark of a professional trader and for me, this was a huge milestone in my personal trading. In order to understand what my risk and profit target is getting in to a trade I needed to really understand how the market works. When I can comprehend what I am looking at on my screen and I can say to myself (or anyone else) “this is good entry because….. and as a result of this I will know this trade is behaving when it does X and I will know it’s time to dump it if it does X,” then I am on my way to making some money in FOREX. This is how you make money. There is no luck involved. It comes down to being able to identify a trade set up and being able to pull the trigger. In actuality, this is the easy part. Let’s talk about where things really get hard…
If I am trading from a place of indifference all the time, why would I ever need to run a stop-loss? The answer is that we are a human beings and no matter how emotionally stable we think we are there will come a day where the market spins you out and makes you feel like you know NOTHING about trading. Any long time traders know this to be true, no one is immune from taking losses. The mark of a true professional is how clever we can be, and gracefully we can lose (I’ll cover this in the next section). To protect ourselves from ourselves, we need to preset a stop-loss when going into any trade that is automatically set the moment I click in. It is there to serve as a safety net to ensure that my emotions will not get the best of me in the event that things go wrong, which they will.
As I mentioned above when explaining the importance of a stop-loss, the next logical question is “what should my stop-loss be.” For me I use a 1:2 risk reward ratio. I will explain how this works. If my target PIP goal is 50 pips, then my stop should be set to -25. This way if I am making smart trades and my win Ratio is 50%, then I am profitable in my account. I’ll give you this analogy: If you flip a coin, you have a 50/50 chance of calling it correctly. Simple right? Trading should be no different and here is why: If I am only winning 50% of the time but I make 50 pips every time I am correct and lose on half that (-25) when I am wrong, then over a long period of time I am going to remain profitable in my account. This is what I meant when I was referring to losing cleverly and gracefully. Obviously, I don’t advocate blindly trading your account but I love the simplicity of this because you can become a profitable trader with a 50% win rate! Awesome.
An experienced trader trusts their methodology. If any strategy is going to be successful, you need to give it enough time to work. In the first year for me, it was all about gaining experience and trying not to lose money in my account. Every year after that has not become about how much money I can make, but about how little I am going to lose. My experience has shown me that the more I can depend on high probability averages (like a 50% win/loss rate on my trade) and trust them to be true, the more confident I become in the methodology. When a trader combines a sound methodology with experience, and solid foundation in Money Management and risk mitigation, then you are well on your way to becoming a Professional Currency trader.
Director of Enrollment