Recently, I received an email from a relatively new retail Forex trader. It went:
“Chris, I can’t get my trading to work… can you help me? I’ve read many books and paid through the nose for a few seminars. Also I’ve been going to the Forex Factory forums for over a year. I’ve tried many trading systems, followed the instructions and did everything right… but I’m still losing!! Help! What should I do??”
This post is dedicated to addressing this issue (which as far as I can tell, is applicable to many other retail traders as well).
Stop Looking For More Of The Same
First of all, instead of looking for what you ‘should do’, look at what you need to STOP doing.
Stop looking for more “trading systems”. Stop reading the same “trading strategy” books as everyone else. Stop frequenting trading forums. Stop following the same instructions that everyone else is trying to follow. STOP, and THINK for a moment.
You said you “did everything right”… but your poor trading results suggest otherwise. Maybe you followed instructions to a T, but that doesn’t mean you did the right things. In fact, there are countless trading instructions and guides out there that teach all the wrong things.
So the first thing you should do, is to STOP looking for more of the same. You’ve followed those methods and seen the results… what are they telling you? That you aren’t doing the right things at all.
One of the most important things you need to understand is that real traders don’t “follow instructions and make money”. Never take what anyone says as gospel. Not some seminar speaker, not me, hell, not even yourself.
The only barometer of truth in this business is your trading results. If you’re losing money, it means that somewhere, something is wrong. And it’s your job to find out what it is.
So think… what could be wrong here?
Could it be, that you’ve been misled by people who don’t know what they’re talking about? Or, could it be that you got lazy and wanted someone else to do your thinking for you?
I understand your frustration, because I’ve been exactly where you are right now. And I should mention that there is something positive in all of this — you’re still here, searching for a path. You did not quit. There have been many others who found themselves in a similar situation and decided to never trade again. Right now, you are ahead of these people. But as you know, there is still some way for you to go.
Since you’ve addressed your email to me, I’ll share with you what I’d do, if I were in your position.
First point. If you’ve tried something and it clearly doesn’t work, try something else that’s radically different.
For example, if trading with moving averages don’t work for you, don’t just change the period setting and try again. Instead, try a different indicator.
If technical indicators in general aren’t working for you, don’t keep looking for even more indicators to test. Try something else entirely. Don’t worry if it seems silly to you at first… sometimes the best discoveries start out as the most ridiculous ideas.
As a beginner trader I’ve tried all kinds of weird things. Astrology, self-hypnosis and astral projection methods… I know, I know… you might laugh. But those early explorations of a variety of trading approaches gave me the foundation of being able to tell the difference between weak trading systems, and trading systems that have potential.
You Need To Do The Work…
After testing a wide variety of trading approaches, and will eventually start to notice a few that you might be able to tweak towards profitability.
Notice that no where here am I suggesting that you blindly follow anyone’s trading approach. This is work you’ll have to do on your own. Why? Because only by going through this process will you start to understand the type of trading systems that can work in real-time market situations.
You don’t learn to swim by understanding hydrodynamics. You learn to swim by getting into the water and trying all kinds of methods until you start to see the ones that might work. And if you’re smart about it, you’ll practice swimming without taking silly risks and drowning. Learning to trade isn’t much different from this.
Or, You Can Try A Shortcut
Alternatively, you can try to shortcut the process by learning to trade from someone else. Of course, I’m biased about this since I’ve created my own Forex trading course. But again, don’t just take what anyone says as gospel. Check out the page, and see if what I say makes sense.
This Is A Journey, Not An Event
One doesn’t “graduate” from trading school and suddenly become a successful trader. Learning to trade isn’t like learning to become an engineer or accountant. There is no certification that says “you’ve made it”. The skills you need as a trader cannot be fixed because financial markets don’t move according to fixed laws.
So don’t expect to stop learning, because real traders never do. After you’ve learned sufficiently by yourself (or from someone else), the market will eventually become your ultimate teacher. That is when you will get constant feedback from market prices, as you adjust your trading approach(es) accordingly.
In short, there is no fixed or definite way to learn how to trade successfully, but there is one sure way to failure… and that is to keep doing the same things that have been proven not to work.