Many Forex traders today are book smart.
They’ve gone through the Babypips course, read all the Market Wizards books, and are intimately familiar with dozens of technical indicators and chart patterns.
They know all about the theory of trading.
And yet… the vast majority still struggle to turn a profit.
Ever wonder why?
The answer lies beyond trading theory
At the beginning of one’s trading journey, theory can be helpful.
But theory is rarely applicable in practice because while theory is clean, reality is messy.
Learning from theory is great in areas where the rules never change.
But in financial markets, the “rules” change all the time. Unlike the laws of physics that are static, the forces that drive market prices are in constant flux.
So the truth is, you can’t really learn how to trade from a book. It isn’t that easy.
A real trading education begins when one starts trading under real market conditions and learns from mistakes.
Do this long enough, and you’ll come to find that how trading works in theory is very different from how it works in practice.
And so, as far as I can tell, the best way to learn to trade is through experience.
This doesn’t mean that theory is useless, of course. Far from it. Theory is necessary for one to get started, but it’s just 5% of everything you’ll need to learn.
The other 95% can only be learned through (often painful) experience.
You don’t need more theory. You need more experience.
Experience is what you gain when you apply theory to practice, and it doesn’t work.
I’m a better trader today not because I know more about trading theory, but because I know which theories are false.
And the only way for me to figure this out is with experience.
You start by accumulating all the theory, but the real learning begins when you figure out which ones to discard.
Beyond a basic level, your trading ability grows by subtraction much more than by addition.