What comes to our minds when we think about forex? Money, enormous amount of money. We knows that forex is the largest financial market in the world with its $4 Trillion a day trade volume. Yes, that is why we plunge ourselves into the forex world, right?
We want to make thousands, or even millions of dollar trading in this delicious foreign exchange market. Better still, forex brokers offer free trading line (leverage) up to 1:100 or even 1:500. Yes, we can trade 100 or 500 times the amount of our equity.
This is the one! Perfect business, low setup cost with unlimited profit possibility.
Before We Start
We do our homework. We read many good trading books. We study fundamental analysis, trying to grasp what that daunting economics data means. We study technical analysis, figuring out how to use and read many technical indicators and learn how to spot candle reversal and continuation patterns on charts. We open demo account, trading it for several weeks, and lose all the virtual money. We do not despair; we step back and analyze our trading mistakes. We refine our trading system and open another demo account. We trade it for several months, and bingo! Our virtual money grows by 500%.
And the Journey Begin
After all the hard work we have done, we feel confident that we are ready for the real action. We open live account and deposit some money in it. We plan our trade and trade our plan. Not long, Mr. Margin starts calling us. We face it bravely, step back, and do all the routine necessary for improving our trade. We reload our account and continue trading, thinking that we are better trader now. We blow up our account again!
After the disaster, we stop trading. We realize that forex is demanding and stressful business. We surprised finding the fact that 96% of forex traders lose money and end up quitting. Only four of 100 traders are profitable. Is it only 4% of us smart enough to trade and the rest of us just stupid? No, the 96% losing traders consist of various intelligent individuals from various professions, bankers, professors, programmers, economist, physicist, doctors, professional traders, etc. This is not good, not good at all.
In Search of Perfection
We begin to lose confidence. We need help to improve our trade. We must find forex expert who could teach us how to trade. Therefore, we start searching for forex gurus. Surprisingly, they are easy to find, their fancy websites scattered all over the internet. We pick one with the best reviews, pay the subscription fee, and eagerly open our mind to absorb all their trading knowledge and wisdom. We are disappointed; they teach things that we already know and preach wisdom that we can get freely from the internet. We search for other gurus, facing the same reality.
After spend hundreds (or thousands) dollar, doubts start to rise in our minds. Are these gurus really trade what they teach and preach? Are they successful trader? If they successful trader, why bother teaching with all the hassle of setting up webinars, seminars, lecturing, e-book, etc.?
Some of us who have good business intuition considering leaving forex trading behind to start forex mentoring business themselves. Good income with no risk, why not?
We begin to believe that we are part of the 96% losing traders. Should we stop trading? We know that we could not do that, the dream is still there, dream of things we could buy or do if we could profit from forex.
Revelation struck our heads, automated trading system! Since we cannot trade profitably, let the machine do the dirty work. Imagine our own cash machine, which could generate money for us 24 hours a day, 5 days a week!
The majority of the robots we see online are in the $75 - $150 price range, few offered over $1,000. We buy our favorite robot, install it, and let it run to trade our live account. Next time we check our account balance, we are very happy with what we see. Our equity grows by significant amount. At this rate, we could be millionaires in no time.
However, lo and behold, our robot starts to fail. Our equity decline rapidly. It seems the robot cannot adapt to the changing market condition. We stop our robot and throw it away.
We are so naïve. If someone could develop automated trading system that consistently profitable, would they sell it for only $75, $150, or even $10,000? No way! They would keep it for themselves and guard it with their own live. We know that large institutional traders and big boys may run profitable automated trading systems, but how much it cost them to develop and maintain? Hundreds of thousands and maybe millions of dollar!
Back to Square One
Aristotle once said, “For the things we have to learn before we can do them, we learn by doing them.” We learn our lessons.
Will we become successful forex trader? Maybe, maybe not. However, we are sure that we will be better traders.