FAQ
1. Can I become successful at trading?
a. Successful trading skills can be learned. What most traders don’t account for are randomness and the presence of optical illusions that technical (or chart) patterns create. Profitable trading comes from having a real edge and that means that you must have a different perception than everyone else has, whether it is based on fundamental, behavioral, quantitative, or technical analysis. The FX market is remarkably efficient and therefore difficult to trade profitably if you are just trading based on widely known information (i.e. patterns, news, or trends). Moreover, I can’t emphasize enough that you have to be passionate about trading to be successful in it. Mastery only happens with enthusiasm. Lastly, something that many traders (and other people who are planning to accomplish something such as weight loss or leading a project for that matter) dismiss is the 80/20 principle. Only 20% of success is mechanics while the other 80% is psychology. Whether you believe in the numbers or not, the general relationship is true. You must get over limiting beliefs about how much money you can make and disrupt the mental patterns which are blocking you from trading successfully.
2. How much can I earn a month?
a. Performance varies with market conditions and trader ability. It’s not unusual to see returns of 2-5 % per month when applying a low leverage strategy. This is not a guarantee, but rather a statement.
3. What are the most important characteristics that a trader should have?
a. Unwavering confidence in her ability to consistently profit and the ability to constantly remind herself to consider if what she is about to do is in her best interest. This comes from having a method that inherently makes sense. Further, she must be able adapt.
4. How can you make money if you can’t predict anything?
a. Although analysts on CNBC may disagree, being right has nothing to do with being profitable in the market over the long run. It’s doing right that earns you money. Doing right implies looking at the market’s positioning (or in other words, predictions) and realizing when the probabilities could be shifted in your favor. Moreover, for people who understand randomness, it is a painful thing to them because it hinders their ability to predict. However, the contrarian (and to no surprise, profitable) thing to do is to embrace randomness and be able to take profits while your position is developing.
5. How often should I trade?
a. Once you’ve done the hard work to analyze where the opportunities are, it’s your job to practice risk management. A large part of risk is correlation between positions which are originally intended to diversify and lessen risk. Entering too many trades that are correlated is equivalent to overleveraging on one trade, which can result in losses much quicker. It is advisable to keep trades down to 4 or less per week.
