2Bull Forex Blog

If you are trading Forex and making mediocre gains or simply want to improve your overall profitability then this article is for you. The tips we are going to list here are not conventional - but most traders don’t make money fast in forex trading so don’t let that worry you!

These are simple yet powerful tips any Forex trader should consider to improve their profitability.
A good place to start is with classic investment book - the Zurich Axioms by Max Gunther. The wisdom is simple, profitable timeless, unconventional, funny and its one of the most inspiring and essential investment books ever written.

Several of the Axioms are not accepted wisdom - however the Swiss investors who wrote them became rich, while most investors are not.

Let’s look at some of them.

“Resist the allure of diversification”

Diversify your investments is accepted as a way to make money longer term and reduce risk - but all it does is dilute profits. You will read about risking 2% per trade and spreading your trades around - but if you are like most Forex traders and trading a small account of around $2,000 you won’t make much
money risking $40.00!

The Zurich Axioms encourage you NOT to diversify.

Look for the big potential winners and risk more.
This does not mean you are being rash, you are simply risking more on the high odds trades and ignoring marginal trades - many traders simply trade too much.

In currency trading you don’t get paid for how much effort you put in or the amount of trades you make - you get your reward for being RIGHT with your trading signal.

The Pareto Principle - 80 / 20 Rule

The above philosophy of trading less is related to famous the 80 / 20 rule or Pareto principle. The rule states that 80% of your results come from 20% of your activities.

This is true in many areas of life in sales, business and trading.

The rule postulates that by concentrating on the best investments, and ignoring the others, you can improve your profitability.

By only focusing on a smaller number of good trades.

This is really a common sense rule, yet very few Forex traders think about or practice this rule. Most Forex traders are obsessed with trading - they think if their not in the market they will miss a move.
Other traders try trading in ways that simply offer them no chance of success like Forex day trading or scalping. I know traders that make triple digit annual gains and only trade once every few months and I know other traders who trade every day and lose.

Keep in mind - the aim of Forex trading is to make money - nothing more.

Love Risk!

The major reason traders don’t win is they are frightened of risk.

Does this mean you should act in a rashly or in cavalier manner?

No it doesn’t:

However - to make big gains you have to take calculated risks when the time is right and a good trade presents itself and load it up with a meaningful amount of money.

In the Zurich Axioms Gunther states:

“Worry is not a sickness but a sign of health…If you are not worried, you are not risking enough” and “Always play for meaningful stakes. If an amount is so small that its loss won’t make any significant difference, then it isn’t likely to bring any significant gains either”.

If you want to make money fast in forex trading then you need to risk meaningful amounts on the right trades at the right time.

So if you want to make money fast seek out the high odds trades and load them up with as much as you can afford and aim for and achieve higher returns.

There are many currency books but here I have selected three that every trader should have in their library of books - if you are seasoned pro or novice trader these books are great forex education.

1. Market Wizards (Jack Schwager)

Schwager interviews 17 trading legends including Richard Dennis, Paul Tudor Jones, Ed Seykota, Marty Schwartz, Tom Baldwin and others. The traders interviewed are not just traders their super traders. There methods may all be different but there is something to learn from all of them,

One of the top-selling trading books of all-time and with good reason - if you can’t learn from these guys then there really is no hope

2. What I Learned Losing a Million Dollars - (Jim Paul Brendan Moynihan)

This books focus is on losing and may seem an odd choice as essential reading but it is for this reason as it correctly states

There are many different ways to make money but only a few ways to lose it.

Part biography and part a lesson in money management - if you only thought money management was placing a stop you need this book.

One of the most unique trading books you will ever read.

It focuses on the fact that trading and investing are personal journeys; about finding out who you are, and then how to manage what you find and use this understanding to trade successfully.

The reason why most traders never make money is they don’t understand that success comes from within and that trading is all about self knowledge not the method they are using.

3. The Way of the Turtle - (Curtis Faith)

While visiting a turtle farm, legendary trader Richard Dennis had a bet with his big pal and trading partner - Bill Eckhardt that traders were not born - they could be taught.

To settle the bet, they recruited a group of individuals from all walks of life, gave them accounts to trade, and trained them for 14 days and nicknamed them the Turtles.

The Turtles proved Dennis right and earned more than $100 million in less than four years.
Here the most successful turtle Curtis Faith goes through the experiment in great depth offering his unique perspective on the experiment.

He explains why the Turtle Way works in today’s markets and how to apply it. He also shares his wisdom on taking risks, choosing your own path, and learning from your trading mistakes.

So there you have 3 currency trading books that are essential forex education.

Keep in mind:

Currency trading is relatively easy to learn in terms of method the real problem is getting the right mindset and all the above books will give you a unique insight into getting the right mindset to succeed in currency trading.

Treat yourself and get these 3 currency trading books and learn from true market pro’s.

You might have enough money in your hand to start investing in stock and generate more cash flow. But as financially capable as you are, you might be clueless the important things to consider in picking good stocks. Choosing stocks that worth investing is not as easy as picking any stocks from the stock exchange. Here are the three key financial ratios I used myself in evaluating stocks:

Minimum 10% Earnings per Share Growth Rate (EPSGR)

EPSGR is an incremental value of Earnings Per Share (EPS) at specified timeframe; which normally done on annual basis. Stock with the highest EPSGR grows the fastest in that year than the other competitor in the same industry. Consistently giving 10% EPSGR is a good indication that the company has excellent products with great demand and economies of scale. However, it would be better if you manage to find stocks with 15% EPSGR.

Minimum 10% Return on Equity (ROE)

Return on Equity (ROE) is a comparison of the company’s net profits to its shareholders equity. ROE tells you how much you can gain if you had decided to invest in the stock. Companies with more than 10 per cent ROE have the ability to utilize their shareholders’ money for maximum profits. You should not buy stocks that have ROE less than 5% as you can get the same return with zero risk with cash deposit. After all, what is the point of taking greater risk and yet get the same return?

Maximum 60% Debt to Equity Ratio (D/E)

D/E shows you how much debt the company is using to finance its business operation. You can calculate it by dividing the company’s total debt by the total number of equity. You will know if the company is heavily funding its operations from debt should its D/E is greater than 1. This will give you some picture to how sensitive the stock is from the rising interest rates. Nevertheless, there are capital intensive industries which require huge financing from others due to their business nature.

You must consider these key financial ratios altogether as they define just how much valuable your investment would be. Picking one with no business quality at all, just do not make any sense to me. But don’t forget to use some qualitative methods as well in finalizing your stock picks. After all, picking good stocks requires homework and effort. Trust me, it is well worth it.