A few weeks ago I was speaking with a new acquaintance who, upon finding out that I’m a Forex trader, started bragging about a friend who turned $20,000 into $2,000,000 by selling the Yen in 2014.
Almost immediately, my bullsh*t meter went off.
In my head, I was thinking, “his friend must either be very very dumb, or very very lucky. Possibly both.”
But I pretended to be impressed.
I widened my eyes, raised my eyebrows and said something to the tune of, “wow… that’s awesome.”
You see, I’ve been in this business long enough to know that for every one person who strikes the Forex lottery, there are a thousand others who blew up multiple accounts trying to be that one special winner. Survivor bias, anyone?
“Yeah,” my acquaintance continued, “he offered to teach me to trade… but I don’t know, I’m thinking about it…”
My eyes glazed over. This guy just told me that his friend made a 9,900% return in 12 months, but he’s not sure if he wants to learn from him. Go figure.
Not wanting to sour the situation, I went along with it.
“So what’s he trading now?” It was the most genuine question I could muster at this point.
“I… I think he stopped trading. He’s doing something else now”.
So maybe this friend of his wasn’t as dumb as I thought. He knew he got lucky and walked away while he was ahead. Or perhaps he later went on to blow up his account? I didn’t ask.
“Oh, that’s a pity…” I said, as I got ready for the conversation to end. Small talk isn’t really my thing.
“Yeah, that’s a lot of money.” came the predictable reply of a non-trader.
I simply smiled, nodded, and let the conversation die in awkward silence.
This is why I don’t get invited to parties.
It’s not all about the profits
It’s no secret that people learn to trade because they want more money.
But the irony is that a focus on making profits is counterproductive.
Successful traders don’t win by making big profits. They win by not suffering big losses.
And they do that by betting small.
Check out this trader who bet the farm and lost everything:
You can read more about him here.
Bottom line: Don’t get bedazzled by large gains. Watch your losses and the profits will take care of itself.