Every foreign currency trader begins their journey by looking for
the "holy grail" trading system or strategy. This is a very common
mindset. When I began trading forex I truly believed that there was a
single system, program, strategy, or secret that I needed to discover,
and then my profits would come rolling in.
There are 3 stages that
traders go through in their growth from "newbie" to professional.
These stages can be broken down into: program buyer, signal buyer, and
finally independent trader.
It is interesting to note that there
are many more traders in the first stage, not as many in the second
stage, and very few in the third stage. Understanding this progression
will help you to "know yourself" and eventually become a professional
forex trader.
Stage #1: Program buyer:
New traders love the idea of plugging in a program (usually a
trading "robot") and making a killing in the market. This goes back
to my looking for the "holy grail". Great idea, but not very
profitable.
Yes, I know that some of the many "robots" (expert
advisors) on the market today show great results in back-testing, and
even profit for a time in the market. (I've tested 4 different ones
myself). It's their long-term profitability in changing market
conditions that you should question.
When the market conditions change, or you suffer a huge drawdown to
your account on a few losing trades in a row, you will be back right
where you started, but with a depleted trading account.
Stage #2: Signal buyer:
The trader who has gained some wisdom over time realizes that one of
the best ways he can learn is from a mentor. But instead of the
education process, it is very tempting to just subscribe to a signal
service from a market pro, and trade those signals.
There are a few good signal services out there (I know of two
personally), and I am not saying don't do this. In fact, it may be a
good way for you to gain experience in the market, while beginning to
make consistent profits. Just don't stay here forever. You can, with
persistence, learn to read the market and generate your own signals.
Stage #3: Independent trader:
At
this stage, there are a few good indicators and analysis techniques you
have developed and made your own. You have learned good money
management, and have a sound trading plan that you stick to, that makes
you a profit over time. No "get rich quick" here, just
consistent, reliable trading techniques proven in the trenches.
Trading the forex markets successfully will require your consistent
dedication to education and self-discipline. Never stop learning, and
you will reach the point where your market savvy and experience will be
all you need to consistently make money in the foreign exchange
trading world.
Are you tired of losing your hard-earned money to the forex
market? Would you like to start making consistent and serious profits?