Academy of Financial Trading – Forex Markets

Earlier in the week, we provided you with some “interesting facts” regarding Forex trading, and the monetary sums involved on a daily basis.  Let’s now look at things from a slightly different angle.

Online trading, as we often mention, is one of the very few occupations (yes – occupations!!) which people believe that they can succeed immediately in, irrespective of their background or specific knowledge in the subject matter. 

We often refer to day traders as “retail traders”.  This is the industry term for a regular person who has opened an account with a broker, and has committed some of their hard earned capital to this broker in the hope of generating a return – in most cases a substantial return.  This person also has very little experience of the financial markets, or of how they work. 

Let’s put some figures on the table.  Did you know that a recent study revealed that 99.6% of retail traders are unable to achieve more than four back to back profitable quarters?  Let’s put that another way – only 0.4% of traders achieve consistent profits quarter over quarter in one year.  Are you one of those? 

Some investment banks are known to allocate up to 20-30% of their funds into the Forex market.  This generates between 40-60% of their total profits - by far their most lucrative endeavour.

We were recently given a great analogy by a student – trading without an education, without a proven strategy, without learning to trade, is no different than you standing on the 1^st tee at St. Andrews Golf Club, beside Rory McIlroy, then taking all your potential trading capital and betting on you to emerge victorious after 18 holes.  It’s just not going to happen, is it?

End of Week Thoughts

We at the Academy of Financial Trading always find it fascinating when we talk to our students about their trading.  During an initial discussion, we like to cover all relevant areas – their history (if any), there intentions, their goals, their interests, even their opinions. 

Their “opinions” which tends to be of most interest to us… simply down to the fact that there is always an idea that “right now” is not the best time to enter the market. Current market conditions are too volatile “right now”. There is too much uncertainty regarding a militaristic conflict in some part of the world “right now”. There are too many conflicting reports regarding the overall global economic outlook “right now”.

We believe that there are only a few certainties when considering trading.  One certainty is that the time to learn to trade is “right now”.  Another is that the best time to trade is also “right now”. The world is always changing, it is always in a state of flux.  There is always economic uncertainty somewhere. There is always going to be a conflict in some region.  Volatility will always exist in the markets. 

We like the unpredictable nature of the markets.  We like the ever-changing environment. Can it ever be controlled?  Absolutely not – only a fool would think so. 

You can, however, control your trading.  Analyse a market in the correct manner. Use a proven trading strategy.  Ensure that you have a disciplines risk management technique. Remember that the protection of your trading capital should be your number one rule.  Then learn to embrace the change – to love the “right now”. This is one way to become a successful trader.