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Pick a card, pick any card..

January 11th, 2012

Remember the card trick where someone is asked to pick a card, it’s placed back into the deck and the magician finds it even after a good shuffle.

Well, Forex trading is a lot like that for many. There are a number of techniques in the trading deck.  There’s techniques that are automated and will make you a millionaire for only $79 (they ARE tempting, aren’t they?).  And then there’s the books, lectures, webinars, webpages, seminars, and classes to name just a few. Then there’s the sites that evaluate those for you.

So let’s do a little magic here. Pick a technique, any technique. Ok, now give it a try.  Place it back in the deck of other tried techniques/robots.  Can you find the profitable ones?  Most likely, unless you’re a seasoned Forex trader, you wont have much luck.  Why not?  Where’s the magic when you need it?

I lied. There is no magic involved. There’s many techniques that will make a very good income for anyone in Forex.  Matter of fact, there’s many that will make a good income on equities, options and commodities.  There’s a few secrets that many of the successful players know.  And they’re not hard.

So if they’re not hard, why do so many people loose so much money in Forex, time after time until they wind up old and grey living in a cave somewhere eating moss for nutrition? 

One answer is that some people just give up way too soon. If a trade is unsuccessful, an unsuspecting new trader tries maybe a few more times and moves on.  What if there were 100 more Forex trades taken with this same technique?  Would 95 of them be successful?  What if only 70 of them were successful and those didn’t occur until after loosing the next 20 trades in a row?

Which brings us to another answer that is apparent for successful traders but boring for many. How can you find out if this will happen with that latest, greatest technique?  Wait for it…’s really boring….you’ll have to really push yourself to do it….here it comes….drum roll….testing.  Yep, testing. Some of you might think, “Oh, that sounds like fun”. Well, talk to me after 6 hours of testing when the bar charts start looking like real flaming candles. And it takes quite a bit of testing folks.  100’s, 1000’s of trades.   Talk about boring….

And those are just two items that successful traders are very aware of.  If you are in the bunch that is thinking “that’s obvious” right now, great.  Do you do it?  If you test and hang in there, cool.   If not, do the obvious first and try testing, do your homework and see if the technique works.

So how do I test, how do I know something works, what if I’m bad at math, what time zone am I in…..  Ok, that last one we wont be covering any time soon.  But the rest of them we’ll take a shot at in upcoming blogs. So just hang in here with me and we’ll go over some items to help turn your losses into those boring winning trades.

Another apology is in order.  I’ve been trading and learning quite a bit about the profession over the year and I’m going to share it coming up in these blogs.  So stay tuned and the blog will be updated on a monthly basis. Promise.