In this forex faq, we have a question from one of our fellow readers.
Below is the question:
I am new to forex trading. Just to check with you what are the things that I have to take note in trading forex and I will like to know if your course is suitable for newbie like me who do not have much trading knowledge to begin with.
In fact, there are a lot of new traders who are reading my forex blog everyday and therefore I find this a very good questions to answer as it will be beneficial to a lot of you guys out there who are reading my blog.
There are a few things that new traders have to bear in mind if you wish to become a profitable trader.
1) There are no strategies that win 100% of the time
Most new traders are constantly searching for the Holy Grail in Trading. Whenever they encounter 1 losing trade, they will lose faith in that particular strategy and will immediately go in search for the next strategy to use.
As a strategy hopper, you will never be able to settle down and therefore unable to master a strategy completely.
If you wish to become a profitable trader, you will first have to realize that there is no strategy that win 100% of the time.
What you should be looking for is a strategy that have a good risk reward ratio plus a decent winning percentage of at least 65%.
It does not matter how many losing trades you get into every month as long as you remains profitable by the end of month as the bottom line in trading is PROFITS.
Once you are able to settle down with a strategy, you will have time to practice it on a demo account for months. What I suggest all my students to do is to practice what they have learned from me on a demo account until they are able to make consecutive months of profits with the strategies that I teach before they trade live.
If you continue to hop from one strategy to another, you will never be able to settle down to practice a single strategy for months and your success will be delayed.
For some new traders, the success will never come as they will give up halfway during their search for the Holy Grail Strategy which never exist in the very first place.
2) A Profitable Strategy is one with at least 1:2 risk reward ratio
If you have been following me, you will know that I emphasize a lot on risk reward ratio. In fact, I find it more important than winning percentage.
If you have a strategy that wins only 30% of the time but it has a risk reward of 1:3. You will find that you are still profitable at the end of the month.
For example, you have a strategy that only produce 30% winning percentage and have a risk reward ratio of 1:3. Let says that you enter 10 trades every month and out of them, you have 3 winning trades and 7 losing trades.
If you set the stop loss at 25 pips and target profit at 75 pips per trade based on the risk reward ratio of 1:3
Profits Made = 3 x 75 pips = 225 pips
Losses Incurred = 7 x 25 pips = 175 pips
In the end, you still make 50 pips at the end of the month for a strategy that only win 3 out of 10 trades.
That is why I can assured you that you will make a decent income with a strategy that have at least 65% winning percentage and have a risk reward ratio of at least 1:2.
Always remember, the key to profitable trading lies in the risk reward ratio and not the winning percentage.
One of the key reason why 90% of new traders never made it in trading is because they have been focusing on the wrong factor all the while.
3) Never Guess Your Way In Trading
I have also received emails from readers of my blog telling me how much money they have lost so far in trading and when I asked them whether they have a strategy on hand.
The answer is often “NOT REALLY”
What they do is to search for a strategy on YouTube and then trade their hard earned money based on the strategy that they have learned on you YouTube.
I just want to inform everyone of you out there that what you see on YouTube or on any websites are all general strategies. General strategies are those that have not yet been fine tuned or back tested.
They are based on theory and not practical.
Often in my blog, I will tell my readers that those strategies that I have shared on the blog are general strategies and these strategies required you to do some fine tuning and back testing before you can trade live with them.
The reason why I did not share with you strategies that have been proven to work is because this will be unfair to those who had join my Forex Street University Course.
For most of the websites out there, most of them are created by marketers who have not much knowledge in trading forex and what they do is to hire people to do some research for them and help them write those articles. Therefore what you have learned from them are always general strategies that have not proven to work.
The reason why I have written posts on those general strategy is because I wanted those of you who did not join my course to formulate your own strategy which is why I also written a post on How to formulate your own strategy.
As for your last question on whether my Forex Street University course is suitable for newbie like you. I will say that the course is prepared in such a way that traders of any experience can understand and use my strategies.
The course comes in the form of videos so that you can better understand how I setup my chart, where I place my stop loss/target profits as well as when to enter a trade.
I have also included examples to help you understand the strategy better. In addition, the course comes with an unlimited email support where you can email me as and when you have any problem with the course.
I hope that I have answered your question and do feel free to email me if you have any problem.