Categories: Forex Training
Technology has revolutionized forex trading. There are robots, systems, programs, applications, add-ons, plug-ins, indicators, bells, buzzers and alerts! The reality is that most of these technology-based trading processes do not work.
A simple rule to stick to when reviewing a technology-based trading process to assist you in forex trading is, "If it sounds too good to be true, it probably is."
There are solid forex trading programs out there to assist the trader in identifying "potential" trading opportunities. The reality is if a trader is looking for a system to trade verbatim, 99% will not be successful over the long run.
In other words, the forex trader's Holy Grail does not exist.
It is important to remember that the absolute best trading system is the trader himself.
Eighty percent fail at trading. These failed traders typically fall into two distinct categories: the trial and error trader and the technology trader.
The trial and error trader makes the decision to learn to trade via trial and error. This individual will spend countless hours scouring the internet for as much free information as possible. This trader will diligently try and piece together the varying information into a trading strategy by determining what works and what does not. This is a long arduous painful journey.
The real problem with this process is that it is not uncommon for the trial and error trader to make a little money. Once a profit is made, the trader is reinforced that this trial and error process is the path to success. Inevitably the trader soon realizes the profit was achieved through luck not skill. The trader gives the profits back to the market and then some.
The trial and error trader ultimately gives up with the belief the market is rigged.
The technology trader is one that is solely reliant on systems and/or indicators.
The technology trader is lured in with fantastic performance results - past performance, track records or back-tested models. Unfortunately 99.99% of these heavily marketed results are posted as "hypothetical results".
Here is a typical disclaimer:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
In other words the results catch your attention. But realistically you are not going to realize the same results or probably even come close.
Most people never take the time to read the disclaimer until after they have lost money. So the trader purchases the trading robot, system or whatever that is solely reliant on technology with the idea that all they have to do is load up the program, sit back and watch the dollars start to roll in. This concept literally defies common sense.
Similar to the trial and error trader, a profit is realized, only to be given back to the market and then some. The difference with the technology trader is he still believes there is an auto-system out there that will trade the market for him and make money. The technology trader is convinced that he can find the forex trader's Holy Grail if he looks long enough.
Both traders failed for the same reason. Time was never invested into receiving the proper training. Individuals who take the time to first become properly trained have a greater chance of success than those who do not.
Remember this:
If you know not yourself and know not the market, you will win very few trades.
If you know yourself and you don't know how the market works, you will win about half your trades. If you know not yourself and get emotional, yet you know how the market works, you will win about half your trades.
If you know yourself and the market, you can succeed and win at most of your trades.
Becoming a solid, consistent forex trader is a simple process if one focuses first on getting trained on how the market works.
