If you’ve spent some time browsing social networks, you may have seen a picture of a trader sat on a beach or beside a Lamborghini making tens of thousands of dollars from the ease of their phone. If not, they’re easy to find! These traders or accounts are portraying the trading industry in a manipulated light, tricking newcomers into the industry into a false reality and eventually a blown account.
Ultimately, the dream of making that level of income whilst enjoying the finer things in life is a possibility, the reality is different. 95% of retail traders fail…95%! The problem with society today is everybody wants the lifestyle that certain individuals portray on these platforms, but they want it now! And are not willing to put in the countless hours of work it takes to get there. Heed the advice of Warren Buffet when asked why few people follow his well renowned value investing strategy “because no one wants to get rich slow”.
The first piece of advice I give new traders entering the market, is to forget about making money, because it won’t happen, sorry to burst your bubble. In fact, a more realistic goal would be to not LOSE your money. In my mind, blowing accounts is a rite of passage for a trader, if one doesn’t have any setbacks or difficulties in their life, he or she won’t appreciate when one eventually “makes it”, i.e., the bad days make the good ones better. I’ve lost count of how many times I’ve blown accounts at start of my trading career. If, as a new trader, you manage to keep your trading account around the same as you started, congratulations, you’re better than 99.9% of new traders out there.
What seems to be the normal pattern for a 1st or 2nd year trader is:
- Money is deposited into a trading account, excitement grows, the newbie has been inundated with online forex accounts that say you can make $10,000 a day, no part of the newbie thinks in realities, judgment is clouded by dollar signs.
- Usually, the new trader wins a few trades at the start, they are not shadowed by the fear of losing money because they haven’t experienced it yet. Thinking “this is easy! ill be driving a lambo in no time!”
- The losses start to creep in, the confused newbie is wondering what has happened, this was all so easy just a few weeks ago, maybe ill change my strategy…..that should work.
- What? The new strategy doesn’t work every time!? the losses are still coming, and the likelihood is the money that was initially deposit has either gone or awfully close to disappearing. Thus, the trader thinks “ill place a big bet on this trade and make it all back.”
- 1st Account Blown – the trader has a decision, quit with the belief that trading is a scam, or reload, educate themselves further and try again (well done if you’re number 2), A portion of those 95% of failures do not move on to step 6.
- Funds have again been deposited into the trading account, a fresh new belief, lessons learned, and I know how to do it this time you say.
- Repeat steps 3 to 5 for however long it takes for one to quit (and 95% will)
- Those 5% of brave souls, the battlers, will get themselves out of the cycle of doom (steps 3-5), knuckle down, recognize the realities of trading. The reality that you’re not going to win every trade, the reality that you’re not going to make 20% a month, and the reality that you make money in trading through discipline, equity, and patience. Two of those can be learned, equity must be earned.
As I’ve said before, I do believe that to be a successful trader, you have to go through all the stress, headaches and pain to prove your worth and whether you deserve to get to the profitable trader stage (and I went through a LOT of pain! Which, if you’re a member of RT.FX you will know). To give a sporting example, (which I always like to do). Professional athletes spend years learning and improving their craft to potentially “burst on the scene out of nowhere” those looking on aren’t aware of that individuals journey of hard work, dedication, setbacks etc. to become that break out star.
Becoming a trader will be one of the hardest things you will do in your life, but boy will it be worth it. Just keep your expectations in check, don’t give up, nothing is handed to you on a plate (apart from RT.FX $50,000 trading challenge giveaway!) anything that’s worth fighting for takes effort. Good on you for taking it up, think 5 years down the line, trade for the life you want in 5 years, not the life you want tomorrow, should you do that, you’ll look back and thank yourself for staying patient. That $100,000/$1,000,000 account is there for you; you just need to put the work in to get it. Don’t think I’m being crazy when I say the $1,000,000 is there for you, it is, but it will take some time and if you trade smart there’s plenty of ways for you to get it quicker than you think. Excited? think about being a consistent 3% ROI trader on a $300,000 account, that’s $9,000 a month as a potential second income. If that wets your beak, think about that 3% on a 400k, 500k, you see where I’m going. At the end of the day if you can consistently take money out the market on a $1000 account, theoretically, you can do it on a $1,000,000 account. Just add a few zeros, no big deal, right?
Final Thought – Enjoy the lessons you learn at the start of your trading career; you’ll look back and smile to yourself thinking “oh how naïve I was”. Trading has to be a passion, something you’re addicted to if you are to succeed, if you don’t have that hunger, I suggest get out of the markets and try something else, but if you do, roll up your sleeves and get cracking because opening a trading account may be one of the best decisions of your life, along with joining RT.FX 😉.