The Key Of Success In Forex Trading Is Education

[RedDuke]

The key to long term success is to have the edge. Even though money management, risk control, experience and etc. are important, without the edge, one will loose sooner or later. Probably sooner.

Regards,
redduke

[MDS736]

I think you need a longer time frame to demo an account before going live. I've been demoing accounts for about a year. I'm on my third system (refco) which I feel very comfortable with and have been demoing it for about 6 months. I'm about ready to go live and during this year I read a lot of books on forex trading and I'd suggest you do the same. I also have a background in finance and I've done a lot of statistical analysis on the data. Basically calculating standard deviation on the volatility for each currency pair over a 1 year time frame and applying that to a 99%, 95%, and 90% confidence interval. I've found the results to be quite accurate. I use these confidence intevals to manage my money and when to get in and out of a position. Over this year of demoing accouts I've worked out a lot of my mistakes and I've developed my own trading strategy which is starting to become profitable. Although all of this is paper trading, I know once I go live and with the use of statistical analysis I'll be able to ride the volatility and be able to avoid currency pairs which are not very volatile thus tieing up your capital which could be used for more profitable trades.

[pipscooper]

Originally Posted by RedDuke

The key to long term success is to have the edge. Even though money management, risk control, experience and etc. are important, without the edge, one will loose sooner or later. Probably sooner.

Regards,
redduke

This is so true, yet so many look beyond this truth. All the education / knowledge in the world will not turn a trader who lacks an edge profitable. The key to success in forex trading is not education. Money management is also not an edge. Developing a proven profitable method or system should be the aim of every trader. The key question that should lead to the development of a proven profitable system, or edge is, "where is the opportunity?" Once you have such a proven system, any additional time spent on demo is a waste of time. Before you have such a proven system, any time spent trading with real money is likely to end in lost capital. There are a lot of mixed signals on boards like these. Choose wisely who you listen to because most of the posters here either have an agenda or have no edge.

[MDS736]

If an edge is a proven profitable system how do you build that without an education? I think an education is necessary to be successful at forex trading. Without an education how would you know what is important and how to analyze the data properly. When I first started demoing accounts I would blow them up left and right. Then I started to analyze the data and realized that a lot of the news thats reported is irrelavant and you need to understand the daily volatility of the currency first and then be able to do a proper technical analysis. Now I dont blow up accounts and have started to make money.

[mcboogs]

Saying that money management is not an edge seems somewhat ridiculous. However, if we're only defining "edge" as finding good entries and exits, then I suppose it doesn't apply. I believe an "edge" is anything that can help you turn a profit and MM definately rests under this umbrella.

IMO - Good money management can turn slight losers into winners and winners into bigger winners(1). It also is paramount to managing losses(2). Making your money work for you to increase your profits and cut your losses is one of many "edges" a trader can have.

1) For example, a trend trader who reinvests unrealized profits by opening larger positions during a strong trend can make a lot more money than one that doesn't [on the flipside it can also lead to bigger losses if the market then moves against you]. Succesful management in this regard can turn a system that initially shows a loss into one that makes a profit, because more profit is realized on the profitable trades.

2) As losing is a harsh reality of trading anything, good money management allows for a trader to, without getting emotional about it, accept losses and get away from losing positions.

I agree, with the author of this thread, that education is really key to success in Forex trading, or any trading, or just about anything, period. In regards to FOREX in particular, there are so many ways a trader might approach the markets, so becoming a sponge and sucking up as much information as you can will help you find an approach that works for you.

[RedDuke]

Do not get me wrong. I do think that education and money management are very important, but without the edge all that will happen is that you will loose money more slowly.

redduke

[akforex]

The longer the period of time that prices trade in a support or resistance area,the more significant that area becomes

[pipscooper]

Originally Posted by MDS736

If an edge is a proven profitable system how do you build that without an education? I think an education is necessary to be successful at forex trading. Without an education how would you know what is important and how to analyze the data properly. When I first started demoing accounts I would blow them up left and right. Then I started to analyze the data and realized that a lot of the news thats reported is irrelavant and you need to understand the daily volatility of the currency first and then be able to do a proper technical analysis. Now I dont blow up accounts and have started to make money.

You are right that education is a prerequisite for developing an edge. However my comments were coming from the point of view that many seem to get caught up in the education part of things and lose sight of what their true aim should be: developing that edge. Once you understand the basics of how the markets work, what it means to participate in a negative sum game, and the basic approaches to making money, asking the right questions can lead to the development of that edge. There must be a singleminded focus on that goal, because it is very easy to get off track by this new system or that new analysis technique.

Once you start making money, the focus shifts to consistency. I'm sure you understand what I mean. This is where having a proven profitable edge is so valuable. Don't be afraid to discard comfortable concepts that might be holding you back. Remember that for any given set of logic, there is always a higher order of logic that is more efficient in its approach to extracting money from the markets. When you find that higher order logic you will see your results jump to a whole new level.

Good trading,