“Truth is stranger than fiction.”
Have you heard about the Garden of Eden Fantasy? It’s the allure of enjoying bounty without the burdens of labor. Thinking that money can flow from a laptop and an internet connection, with a few setups is a fantasy – and not so appealing to an industrious mind. I know some who would still figure out how to be creative if they were transported to the Garden of Eden. Now the fact is that very successful traders and portfolio managers are like very successful physicians as well. They’re highly dedicated, work long hours, and constantly upgrade their skills.
Many an unwary beginner is always a victim of unscrupulous marketers who not only promise you the moon and the stars, but also encourage high risk position sizes (based on the results they show) so that you might attain financial freedom quickly. They’ll show you only the charts on which their systems win. Back-testing can be great – it looks like an ideal world. The problem is that we aren’t perfect on the live markets. For example, fear may stop you from taking a trade that would’ve been a winner, despite the fact that your entry criteria are met. One marketer announced 2 years ago that a fool could use his trading system successfully. Please think about it. Can a fool ever succeed in trading; something considered the toughest business in the world? A few months later, the marketer himself abandoned his own trading system and began using something else. Then what would be the fate of those who bought the system with the hope of trading successfully with it? Not all marketers are deceptive; only that majority of them would tell all lies they can in order to make you buy their products. Some of them don’t even use the products they’re promoting, and they want you to buy it.
If you’re an experienced trader, you should probably not be deceived anymore. Apart form the fact that Excel can be used to design false account histories, you should be able to know the merit of an account history, eg, does it have stops, the risk per trade, the deposit date, and so on. I was a victim of the marketers before. One was telling us at a seminar that if the system he was promoting gave us about 90% strong signal, we could risk 100% of our accounts on the trade. Are you kidding me! Yet we thought he was a great trader and that he was telling us the right thing.
Let me tell you more about the market wizards or pros or the so-called gurus, they take losses all the time (they even go thru horrible losing streaks as well). They just enter the markets whenever the setup of their variables meets their entry criteria. They know that they can’t beat the markets – just as a sailor can’t beat the weather, knowing that he has to live with it. But they still survive, because their low risk prevents them from significant drawdowns, and their positive expectancy systems make them recover quickly when a winning streak creeps in. They stick to their trading plans and remain unemotional when they trade. They know they’ll always give up some part of their profits, but they want to give up as little as possible.
You may previously think gurus don’t lose because they don’t show you their accounts. Perhaps that’s the reason why most traders find it difficult to get out of their trading fallacy. Most reputable funds management companies have both winning months and losing months. A funds management company may obtain -3% this month and earn +4.8% next month. In a nutshell, they survive mostly on annual basis and it makes a considerable difference because their funds are in million or billions of dollars.
Don’t think that showing trade results on a demo account will put your ego on the line. After all, you aren’t showing your real account. Assuming we are transparent and show trading as it is, many beginners may avoid the painful experience of the bumpy road to being a successful trader (they’d want to train to satisfaction before they start risking their money). One popular analyst confessed to a world-renowned trading coach that while certain traders had made money from his markets analyses, he himself hadn’t made money with his own analyses. Analyses are different from trading systems. That’s where the problem is: we can all talk great, but it may be difficult to trade great.
My conclusion is that losses are a normal part of trading, and you’re on your way to financial freedom as long as you consistently make more profits than losses in the long run. If you don’t want to see any losses at all, what would you do when you see them in your own account history? Are your perfect in everything? See what Dr. Alexander Elder writes below about one of his books:
“… I decided to approach about 30 traders and ask each of them to tell me about their method and show me one trade. And when I started planning for that and talking to people. One of my friends who is a hugely successful multi-millionaire trader said to me, ‘Alex, you are going to ask 30 people. Everyone is going to give you a good trade, a winning trade, and some poor beginner is going to take this book and think trading is easy.’ It’s not easy. At that point I shifted gears and instead of going to 30 people for one trade each I approached 16 people and asked each of them to show me 2 trades, a winning and a losing trade… After turning the page you’ll find out if this particular trade was winning or losing. I also added my own commentaries about the entry and exit, why it won or lost money… I find I learn much more when I lose money and that’s why this book contains losing trades as well. This book actually became very successful in America…”
Your questions and opinions are highly welcome.
With best regards,
Forex Signals Strategist, Funds Manager &Coach
NB: There is risk of loss in trading, but it is possible to be a successful trader.
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