2Bull Forex Blog

I read all the time about how important it is to learn lots of information to trade forex and how you continually need to learn, but this is NOT true.

Succesful Forex trading is actually very simple and the knowledge is easy to acquire, yet 90% of traders lose – so why is this ?

Because knowledge alone is not enough, furthermore you need to learn the right knowledge and most forex traders don’t.

There are plenty of very smart people who lose and plenty of small potato investors who make a lot. The fact you have a lot of knowledge or are clever does not ensure success and in most cases ensures you lose.

Let’s look at this in more detail.

The right knowledge.

Is not hard to acquire and starts from learning yourself and not trying to get a short cut to success by buying it – if you think you can buy success you are going to lose.

Trading means getting knowledge that works and you can have confidence in.

Your aim is to make money, not be clever and you can build a simple system from free resources on the net.

Simple systems beat complicated systems as they are easier to understand, easier to apply and make more money as they are more robust.

Fact is most of the top traders in the world use simple systems.

We have been traders for over 22 years and our system is simple:

Trend lines, support and resistance to spot trends and 3 confirming indicators and that’s it and it works.

The right knowledge is easy to acquire but the trick is you MUST understand it, to have confidence and this gives you the trait that most traders lack.

Discipline.

If you try and follow someone else you won’t have confidence and you won’t be able to follow a system with discipline.

Unless your knowledge is acquired by you and you have confidence, you won’t be able to follow your trading system through losing periods. You will simply throw in the towel

Discipline sounds easy to acquire but it isn’t – it’s extremely hard to hold your emotions in check.

How do I get the RIGHT Knowledge.

Forget all the e-books, courses and other forex education sold on the net.

Go to Amazon and get some books by top traders, who have walked the walk rather than simply talk the talk.

Most sold info on the net is not worth the money and you can get far better knowledge cheaper at your local bookstore.

Good books to start with are Jack Schwager – Market Wizards and New Market Wizards – the interviews here are all with legendary traders and is a great inspiring read.

Then get some books on trader psychology.

I am a big fan of Jake Bernstein who really shows how important and elusive getting the right trading psychology is and really hits it home.

Another favourite of mine is Trader Vic by Victor Sperandeo, a fantastic book covering all you need to know from money management to system building.

Done that?

Then go on the net and build a simple system based around technical analysis, a breakout methodology find a few indicators you like to confirm trend momentum and you’re all set to go.

Sounds simple?

Building the system is the easy part – getting the right mindset is the hard part – good luck.

Swing Trading is fun, exciting and can be very profitable and is one of the easiest forms of trading for a novice to master.

There are many swing trading systems that are sold by vendors via e-books and software, and courses or of course you can build your own.

Lets look at choosing a swing trading system that can be you some great capital gains – so what makes a successful swing trading system?

Let’s find out.

Firstly let’s give our definition of swing trading. The object of a swing trading strategy is to make money from the intermediate swings within the longer term trends and these typically last for a few days or a few weeks – this is not day trading!

You cannot make money day trading as there is no reliable data – so don’t try.

Ok let’s look at buying one from a vendor and points to consider

Here are some points to consider when buying a trading system from a vendor:

1. Understand the logic.

If are swing trading forex stocks, or futures you need to understand EXACTLY how the methodology works and why it will be successful.

You must understand why the system will work because you are going to have to have the discipline to follow it through losing periods and this only comes from understanding and confidence.

So if you buy a forex swing trading system don’t follow it blindly, understand everything about it. You need the discipline to follow a trading system through losing periods, or you have no method in the first place.

Swing trading is essentially simple and the method should be easy to understand and apply.

2. Does it suit your trading personality?

Swing trading systems vary in terms of the risks they take and the drawdowns they incur – make sure that you buy a swing trading system that suits your personality and your risk tolerance.

3. The track record.

While a track record does not guarantee future profitability, it does give you confidence in its ability to make money and what it is capable of.

Look for a real time track record of profits over a two year period of trading. Don’t trust hypothetical track records these are done knowing the closing prices and really if you know the closing prices its easy to make a profit!

4. The vendor.

Find out as much as possible about the vendor and their trading experience – many systems are sold by failed brokers or marketing people, who simply make up a hypothetical track record, so be wary before buying.

Look for a money back guarantee if possible. This will give you the comfort that you will get your money back if the swing trading system you are being sold does not live up to the vendors claims.

Swing trading is great for novice traders as it provides regular trades and plenty of action while hitting the high return low risk trading opportunities.

Trading opportunities also do not take long to complete and the result is quickly known – hopefully in the swing trader’s favor!

There are some great swing trading systems you can buy and get the right one and you could be making some great regular capital gains from your system – Just be careful in your selection and follow the above tips.

The mistakes below are common amongst novice traders and ensure 90% of them lose and lose quickly – while novice traders make these mistakes so do experienced traders.

If you make them, you will lose so avoid them and increase your chances of success dramatically.

Here they are all ways guaranteed to lose you money.

1. You Can Buy Success

Many traders think trading is easy and they can buy success in forex trading for a few hundred dollars – major mistake! Most forex education sold on the net is sold by marketing companies or failed brokers and simply doesn’t work – if it did it would not be sold. There is some forex education you can buy that’s good and the best way to ensure it is worthwhile is only accept the proof:

A real time track record of profits no hypothetical simulations! To follow a trading method you will need to understand how and why the logic works – if you follow it without understanding it, you will not have the confidence to follow it with discipline.

2. Being Clever Will Make You Money

On the other hand there are people who think being clever will make them money and they have a right to win because their clever – Another major mistake. In many industries you get paid for how much effort you put in but not in global forex – you get your reward for being right and that’s all.

Many traders devise complicated systems that are extremely clever and they lose. It’s a fact that a simple system will beat a complicated system, as its more robust with less elements to break. Don’t complicate your trading system or methodology, keep it nice and simple.

3. Knowledge = Power = Profits

While you need a simple trading system to succeed you also have to learn the right knowledge. Knowledge for knowledge sake in forex trading won’t make you money. In fact most of the accepted wisdoms of forex trading are no help at all when trying to make money and that’s why 90% of traders lose.

Lets take one example, online news sources will help you win, as your better informed.

Yes you are better informed but that won’t make you money, in fact it will help you lose! Why? Because those news stories are just so convincing.

Think about it, these guys are telling stories their NOT traders and most news stories are convincing but dead wrong. This is just one example and there are many more, where traders focus on the wrong knowledge and lose.

4. Day Trading Makes Money

One of the biggest myths of all is day traders make money.

Try and find one with long term track record of profits and you will look for years and never find one! Why? Because it doesn’t work – great story but that’s all it is.

It doesn’t work due to the simple fact that all daily volatility is random and if the data is random, you can’t get the odds on your side – PERIOD.

5. You Can Get Rich Quick

Yes you can, but this is not the norm.

Many traders think making over 100% is easy and over leverage, trade to much and take high risk low reward trades and then lose their equity.

Be realistic about what you can earn, in your first year if you made 50 – 100% then you would be up their with the top money managers in the world.

Take it slowly and look longer term – if you compounded 50% for 10 years you would be extremely wealthy at the end of the period!

6. Discipline

You here it time and time again – discipline is the key to success, but very few forex traders actually know what it takes to be disciplined, so here is a simple explanation:

To be disciplined relies on these three personality traits:

1. You must have a desire to succeed and accept that you are on your own and learn the right knowledge by developing your own trading reality.
2. This leads to confidence that you can achieve trading success.
3. From confidence comes discipline, to follow your trading methodology through the bad times without throwing in the towel, to achieve ultimate trading success.

Final Words

Read and digest the above and don’t make the same trading mistakes in your forex trading.

If you avoid them you could soon be on the road to big profits – Good luck!