Archive for September 3rd, 2010

Forex Trading – These People With Just 14 Days Training Made Millions!

Its true and one of the most famous experiments in trading history, where a group of people were taught to trade, went on to become trading legends and make hundreds of millions of dollars. How did they do it?

Let’s look at this fascinating story, as there is much to learn.

We first need to go back to the eighties, when trading legend Richard Dennis, decided to set out to prove that anyone could win at trading – with the right mindset and education.

He gathered a group of people who had never traded before, from all walks of life, all ages both sexes and various levels of academic achievement. They varied from a kid fresh from school, to a security guard and an actor and many more. He then set about teaching them to trade, in just 14 days.

He then gave them accounts and the rest has gone down in trading history.

This group made hundreds of millions of dollars and become trading legends.

So there you have it – anyone can learn to trade and do it quickly.

You maybe thinking well if its that easy, why do 95% of traders lose their equity?

The answer is its achievable and within reach of anyone – but its not easy!

You wouldn’t expect it to be with the rewards on offer but you can do it if you keep these points firmly in mind:

1. You need a simple method you understand

The system these traders used was simple (it was essentially a long term trend following breakout system) and the traders had confidence in it because they knew exactly how and why it worked.
Dennis didn’t tell them to blindly follow him – he taught them the system to use for themselves and the next point separates out winners from losers:

2. From Understanding Comes Discipline.

To trade successfully you must have discipline. You have heard it’s important and it’s vital. If you cannot follow your trading method with discipline, you simply don’t have one!

Discipline comes from confidence and understanding – if you don’t know how and why your system works and have the confidence to follow it, you won’t have discipline.

Staying with a method when your taking loss after loss is hard, (even the best traders face this and you will to) but you must stay on track and profits eventually will come.

Sure you may not become as rich as the above group but do what they did.

Get yourself a simple robust forex long term trend following system and follow it with discipline and if you have courage and a solid forex trading strategy, you can enjoy currency trading success.

Forex Brokers ? What I Learned as a Broker Trading 5,000 Clients

I spent 10 years as a forex broker and traded thousands of clients, here I will give you a broker’s view of trading clients.

I will reveal who won, who lost, how we made money and how we treated them.

I joined as a rather green salesman and had no idea about the reality of forex and futures trading.

I was excited about joining an industry where millions were made and millions were lost by clients – It was very exciting!

The company

I was rather shocked at the reality which was:

Clients didn’t appear to win very often and the company based its balance sheet on commission to equity.

The view was that about 95% of clients would lose and they would do it all on their own, with no help from us.

The clients we liked (from a financial perspective) were the ones who made commission for the company and top of the list were:

Day traders:

They lasted for short periods, never won and made loads of money for the company.

If they believed it worked, let them get on with it and we would take the commission.

Shoot from the hip traders

The action men.

They loved the buzz, in and out all the time, trading the news and advice from gurus and with no discipline.

Again, they wiped themselves out and made us plenty of money.

The company did not dislike its clients.

We treated all clients well and did what a good broker should:

Help them with queries and made sure they got fast accurate executions.

We just let them do as they wanted and in most cases they lost – that’s simply the reality of trading.

The clients

We had clients from all walks of life, from retired people, to highly educated mathematicians and the few that did win surprised me.

The ones I personally hated were the ones I will refer to as “educated fools”

Cocky as anything and believed they had a divine right to win, because they were clever.

They would ignore my warnings, that they would not win with systems that were too complicated and tell me to mind my own business.

If I am honest, when they learned the reality of a wipe out, I felt a little inclination to say “told you so”, but never did.

Perhaps my favorite client was a retired lady, 81 years of age, who lived on a sheep farm in Australia.

A lovely lady and she taught me a few things, that I remember to this day.

She devised a system and showed it to me.

It was a simple buy and sell strategy and relied on holding big trends for months on end and you could learn it in a few hours.

Personally I thought it was to simple to work, but she built a ,000 account to ,000 in three months and had passed 0,000 in under a year.

She drew her charts by hand ( this was the late eighties) and didn’t have a TV and never read the papers.

Each day she would check her prices draw her charts and make her trades if she needed to.

A polite, humble trader, who was loved in the office by all.

We all had respect for the way she was our most profitable trader, even above some quite well known money managers.

We had many other clients.

Most lost and some won ( very few), but the ones who did win were humble, had simple systems, traded only when their systems told them to, had iron discipline and believed they were right.

This is just my experience.

I did trade a lot of people.

They from all walks of life and I learned very few won, but the ones who did, kept it simple, the ones who didn’t, had big ego’s, or liked excitement and traded with their emotions lost.

Forex Markets – How and Why Forex Markets Move & How to Profit

There are two factors that move FOREX markets and if you understand how these two factors combine you will be able to make big profits.

The relationship is not understood by most traders so let’s look at it and how you can profit.

Let’s look at a simple fact first:

FOREX markets move in trends:

They move in sustained upward or downward directions, for periods of months or years.

These trends are not of course a one way movement and we see constant retracements, which can last for various periods of time.

These retracements can form shorter trends of a few days or weeks and can be against the major trends.

What causes these trends?

Currencies reflect the underlying economic health of the country the currency represents.

Economic cycles tend to last for months or years and these are reflected in longer term currency trends.

Markets don’t of course just respond to economic fundamentals, but also how people view these fundamentals.

Prices therefore are a combination of:

Economic fundamentals + Investor perception = Currency price movement.

Prices do not move logically, in relation to the underlying economic fundamentals – they are influenced by the emotions of greed and fear of the investors.

When you trade currencies you have to be aware of this combination:

Price is determined by the economic fundamentals and investor perception of what those fundamentals mean.

Investors therefore ultimately determine the price on what they see and how they perceive it.

It is obvious from the above that simply studying the economic fundamentals will not make you money.

Economic forecasting has made huge advances in recent decades, yet the ratio of winners to losers still remains the same.

You MUST be able to gauge human psychology and see when it has pushed prices to far from fair value.

You can then calculate the odds of when prices are likely to turn.

The simplest way to do this is with technical analysis.

By studying charts you see both.

Economic fundamentals – These are reflected instantly in price action, so technical analysis allows you to forget about studying economic data and news.

Investor psychology – It allows you to see how investors perceive the fundamentals and the emotions of greed and fear at work.

Human nature is constant and can be traded for profit

As investor psychology is constant this shows up in repetitive price action and chart formations that can be traded for profit.

Traders very often think that all they need to follow is the economic fundamentals and yes, these assert themselves longer term, but short term retracements and price spikes are caused mainly by investor perception with the emotions of greed and fear to the fore.

The simplest way to see both is to use a technical approach to trading.

Learn to use technical analysis correctly and you will soon be spotting some great trading opportunities.