It is a well-known fact that roughly 90 percent of forex traders lose
money, about 5 percent break even, and 5 percent make money. Why?
And what can be done about it?
The answers to these questions may be the most critical for any forex
traders. This chapter explores these issues and attempts to highlight ways
that traders can become profitable in their forex trading. The psychology
of trading is the most important factor for determining the success of your
trading.
There are numerous trading systems on the market that are profitable.
There are numerous trading advisors and newsletters that have had longprofitable
track records. Yet the average speculator is a losing trader. The
average speculator, when handed sound advice, will still lose money.
I have been writing on this subject since my book Commodity Spreads
(John Wiley & Sons) was published in 1982. I feel that understanding
the psychology of trading is vitally important for myself as a professional
trader and for you, the intelligent reader of this book.
I have given lectures on this subject mainly to futures and forex traders
though the years. The first thing that I do is ask how many people in the audience
have made significant money over the prior two years. I have had
only one person raise their hand in the hundreds of people who have attended
the lecture. I then ask how many had made significant money over
the prior year. I get a few hands. The point: The vast majority of traders
don’t make money.
I have often wondered why. After all, the vast majority of the people at
the lectures are successful people in their businesses. It costs about $500
to attend the conference, and the attendees may also be paying for travel
and hotels to attend the conference. It takes a certain amount of money to
spend a minimum of $500 to gain some insight into trading.
There are few people who attend these conferences that are not very
successful people. Why is it that they can be successful doctors, lawyers,
and business owners yet cannot trade forex? What is it about forex trading
that is so hard?
WHY DO YOU TRADE?
I ask the audience members why they trade. Of course, the answer is to
make money. I ask them if they are really sure. By this time, they are starting
to second-guess their first answer. But, in the final analysis, they stick
with their answer: that they are trading so that they can make money. I
think that that is completely wrong. I think that people trade for tons of
other reasons and that making money is a relatively minor reason. Nobody
really knows why each individual person trades but there are many reasons
other than making money.
I first discovered this about 20 years ago. Back in the 1970s, I managed
futures money with a partner. We offered two different accounts to our
prospective clients. The first account traded only commodity spreads and
was making 200 percent per year while the second account traded only
outright positions and was making about 100 percent per year (please note
that these returns were so high because I didn’t know as much as I do
now about risk and money management and we were simply taking far too
much risk).
Of course, everybody opened up a spread account because it was
making 200 percent per year. Within six months, nearly everybody had
shifted their account to the outright program in spite of the fact that it
returned only half as much! This stunned us because we always assumed
that people invested in futures to make money. In fact, they were involved,
I believe, for the action. They would call us up when they were invested in
the spread account and ask how their account was doing. We would
respond that they made $12.50 the previous day because a back spread
in the corn market has moved one-quarter of a cent. On the other hand,
they would call about their outright account and we could say that the
value of the account had moved $1,000 because of some big move in the
bellies.
The point is that they wanted the action of the futures markets, not
the profits. Their primary motivation was action and making money was
secondary. It’s okay to pay to see a movie because of the entertainment value.
from : forex trading
2 commentaires
Are you trying to earn money from your traffic by popup ads?
In case you do, did you take a look at PopCash?
Posted on 15 septembre 2016 à 15:53
Did you know that that you can earn cash by locking premium sections of your blog / site?
Simply open an account with AdWorkMedia and run their Content Locking widget.
Posted on 9 octobre 2016 à 23:37
Enregistrer un commentaire