5 Uncomfortable Truths About Trading

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Are you still on track to reach your trading goals? Are your trading systems living up to their back-and-forward testing potential?

If you’re frustrated with your performance, don’t worry. You may be forgetting a few basic truths about trading.

Let’s examine some truths that not many traders will tell you, but which will help you in your trading journey:


1. It takes money to make money.

While many traders have successfully started small, they have also had to deal with pitfalls associated with trading from small accounts.

For example, trading oversized and overly leveraged positions carries greater risks of margin calls.

Investing more in the P/L of each of your trades also allows you to make more trading psychological mistakes than if you had a larger account that you could afford to lose.

Don’t get me wrong, you CAN certainly start trading with just a small amount of money. And bad traders can blow up a large account just as quickly as they can blow up a small one.

But trading is not a hobby. It’s a business. And like most businesses, it takes capital to make a significant profit. Don’t expect to make hundreds of dollars a week from your $50 account.


2. You have to be where the action is.

One of the more common trading advice is to maximize opportunities during the time of day when you are most available to trade.

This strategy is fine. If you are a newbie who wants to get your feet wet.

If you are serious about developing your trading skills and confidence, you need to trade when the market presents you with the best opportunities. For most traders, this usually means trading on the London and New York sessions.

Just as a doctor would see a broader range of diseases in a tropical third world country than in a suburban first world, traders trading the more active trading sessions are likely to sharpen their skills faster than trading the quieter sessions.


3. You will be wrong. A lot.

And because no single system can remain profitable through ALL trading conditions, even your tried-and-true mechanical systems will get a lot wrong.

So how do you stay profitable even when you’re wrong?

Remember that a trader doesn’t have to have a high win rate to be profitable. Some traders can be profitable with low win rates if their average profit is high enough.

Instead of focusing on winning, focus on learning the art of “feeling” the market.

A trader who can quickly identify changing market conditions while managing risk is a trader who can consistently remain profitable.


4. There is no holy grail in trading.

In case you missed the 57,219 memos we shared, let me repeat it for you:

There is no “holy grail” or indicator, method, strategy or system that would give you profits from forex trading 100% of the time.

Now write it down or write it on a t-shirt!

Just because there is no holy grail doesn’t mean you can’t be profitable. Many traders are already trading full-time and even more are content to be consistently profitable.

The key is to control your risk. Since you cannot eliminate it, the least you can do is control it with proper risk management.


5. Trading is NOT for everyone.

There are many reasons why 95% of new traders eventually fail.

On the one hand, it takes TIME, EFFORT and a lot of PATIENCE to become sustainably profitable. Those unable or unwilling to bid on all three will likely find themselves in the 95% before the end of the year.

It’s also possible that a person is simply not cut out for trading. This does not count against the person or the industry. You wouldn’t force someone into the military or play the piano if they weren’t interested or suited for it, would you?

That means you won’t know if trading is for you until you’ve tried it long enough and put in enough effort to try to become consistently profitable.