5:14a GMT - No signal today because of the holiday, but I've written a long post on what it takes (and what it doesn't take) to be a successful forex trader. I hope you read the whole piece, as I think you will benefit from it, and share your thoughts and feelings at the end. Reflect on what you learned in 2009. What you hope to do better in 2010. Anything. God bless.

New Year's resolutions. Every year millions upon millions of people make them. Then, every year, 95% of people fail to achieve them. Want to guess what the failure rate for aspiring forex traders is their first year? Roughly 95%.

Coincidence? I think not. You see the same things that make it hard to achieve one's general resolutions (e.g. lose weight, start working out, eat healthier, etc.) make it hard to succeed at forex. To lose weight it takes discipline! You have to come up with a plan. With specific goals so you know if you are achieving that plan. And, more important than anything, you have to wake up every morning and stick to that plan. There will be times when you want to get off of it. You'll think just this once it will be OK not work out or eat this junk food. There is always tomorrow! The same applies with forex! If you don't have a specific plan with every trade, every day then you will fail in the long-term and be just another of the 95% that couldn't make it.

Too many traders have a false dream of succees, whether they know it or not. In it they have the envy of their friends, family and all. They have done something others can not - conquered the markets. Quit their dayjob. Mastered complex financial instruments. Wall Street? Who needs it - you can earn hundreds of dollars every day as you sip coffee and click your mouse. Friends are envious and everyone talks about how lucky you are to be so smart and to have such a nice life. You can wake up when you want, follow your own schedule and answer to nobody.

Are those things possible? Yes. Unfortunately you will never achieve them until they are completely purged from your head.

In this post I'll dive into what I think should be in you head everytime you sit down to trade. And, more important, what should not be in there.

What should you be thinking about?

Everytime you go into a trade you need to know first: how much can lose on this trade? If things go south, which they inevitably will with some trades, how much of a dent will it put in your equity? Second, what are your odds this will go in your direction? You should know from months of demo-trading, months of journalling and revisiting your trades that this particular setup you are thinking of entering will yield a reasonable chance of success. If you are just guessing, or going off of gut feeling you will lose in the long-term. And only then should you consider how much you could possibly profit on a trade.

I see traders come in here all the time with high hopes, eager to make 50 trades a day and tell their family how great they are doing. It doesn't work that way.

So, to any beginners out there let me clear some myths up for you:

1) forex is not a get-rich quick system. In fact, if you have that attitude I prefer to refer to it as a get poor system. With no trading plan you will have the same odds of going to your local casino and wagering all your money on the roulette table.

2) there is no system that will do it for you - Any sales pitch that promises you can turn your computer into a cash register with no trading knowledge is a lying to you. Straight-up there is never any truth to those scams. If that was the case they would take out a loan, borrow money from friends and buy as many lots as they could and instantly become billionaires.

3) A PROFITABLE trade is not always a GOOD trade, and a LOSING trade is not always a BAD trade. Hard lesson to learn. Trading is about probabilities and long-term success. Think about this: you have a trade setup has a 70% chance of being a profitable trade, and the money management is sound. Sounds like a good setup, right? It is! But what about those 3 out of 10 trades that are not profitable? Are those bad trades? No! Losses are a part of the game in forex. You just have to know your system, know how many losses you can take and be able to be confident in that 70% success rate.

4) Consistency, discipline and knowledge are not optional. Without a consistent, systematic approach to your trading plan you will never know if a trade has a 70% success rate or a 10% chance. You will be taking stabs in the dark, reacting to the your latest trade emotionally based solely on whether it was profitable that time, not whether it is high-probability trade in the long-term.

Think of it this way:

You are competing against the best of the best. Imagine you walk into a professional football game (soccer for my fellow americans). Would you bet the professional player standing next to you that you could kick harder then him? Or faster? Or with more accuracy? No! He plays football for a living. He practices every day, kicking, passing, heading. He knows if he does a ball fake you'll jump and he can blow by you. It is no different in forex. You are competing with professional traders who want nothing more than to separate you from your hard-earned cash.

Until you can confidently answer questions about the historical probability of your success on a trade setup, your money management and how much you can lose/win on each trade you take then, in my opinion, you might as well be betting in a casino. And in casino the house always wins.

Sound bleak yet? I'm hoping it does, because that was my goal. But don't hang it up quite yet, because it will soon be the New Year, and there is still hope!

Your goal is to do what 95% of the other forex traders are not doing so you can become the 1 in 20 that succeeds.

That means studying. Getting books and learning the markets. That means keeping a journal, every trade you do, revisiting those trades at month-end and being honest with yourself about the pros/cons of that trade. Participating here at PipHut. Talking to other traders. And above all - being honest with yourself.

I've tried at PipHut to roll out tools that can help you achieve that success:

1) first and foremost - the free daily signals at PipHut.com. You know, what you would be reading right now if it weren't a holiday!

2) Candlestick Alerts - this is such a powerful service and has taken off in popularity. But a tool is only as good as you the user who yields it.

3) Forums - here you can post your own charts, start a journal, talk about anything forex related.

and more.

And there are more exciting things to come in 2010, things that I know will help you - things like specific entry/exit signals, signals for more pairs like the AUDUSD, GBPUSD and more - but don't let that distract you from what should be your main New Year's resolution in 2010 - to improving consistency, discipline and knowledge of forex. And if you can do those things you WILL be a successful forex trader.

If you've been trading forex for over 1 year then you have already beat the odds! Now it is time to take your trading to the next level, and I look forward to helping you get there in 2010.

Have a happy and safe New Year from PipHut!

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