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“Everyone gets what they want out of the market, including losses!”
The following great article was written By Michael S, a member of our forexmentorpro group. Trader psychology is THE key to becoming a successful forex trader.
“Everyone gets what they want out of the market, including losses!” Tom Strigano
l recently read another interesting quote which l forwarded to Marc; basically, it stated that to be a successful trader you need the discipline of a soldier and the patience of a saint. Marc was in total agreement.
The quote, obviously true, got me reflecting a little on the nature of this game we call Forex. Indeed, Foreign Exchange as we know it in the present western world was founded almost a thousand years ago by the Knights Templar and the Knights Hospitaller; warrior monks!
You could deposit your gold or currency in London, for example, and receive a Promissory Note which would be honoured by the Knights at their Paris, Constantinople or even Holy Land “branches”.
They were uniquely capable of providing security and uniquely trustable, and so obtained fabulous wealth from FX! Unfortunately, this wealth later proved to be their downfall, but along with the question of the morality of those wars, that’s a story for another day.
So, is FX a still a high risk bloody battle? Of course it is, we all know that much at least from experience! Back in December Julie Hawk drew us a map of the layout of the battlefield, and described how the battle is conducted on it.
As an ex Pro Trader in the FX department of a major commercial bank she described how all the different “desks” such as “spot”, “forward” and “options” carried out multi-million dollar transactions for the bank’s clients and how they laid off the risk involved.
The two links below complement that article beautifully. They take us into the heat of battle. l couldn’t follow every nuance of it but l certainly got a smell of the gunpowder in the description of the “drive by shooting” etc!
Trade2Win - Active Trading & Forex Community
Trade2Win - Active Trading & Forex Community
It’s a good read, but not any kind of battle l personally want to be involved in.
As Julie pointed out, retail trading is a different world to institutional trading, and one which requires some quite different skills as well. Indeed, l have heard that many successful institutional traders fail when attempting to set up a business trading for themselves. Having no manager to keep them on track, their discipline and psychology can often fatally let them down, and they blow up their accounts.
This fact then takes us back to the quote at the top of this article, and the question it poses: Are we, in a psychological sense, really the authors of our own success and failure?
The short answer, l believe, is YES. The Knights Templar may or may not have found the Holy Grail (Ask Dan Brown for further clarification!) but it wasn’t something they could or would have used in their FX dealings! The Holy Grail in FX is more related to the patience, discipline and bravery the Knights employed than to any magical formula or secret codex.
l read somewhere that many successful traders believe that the trading method or strategy employed only accounts for 20–30% of their success and the other 70—80% is divided between money/risk management and psychology. Any system with a reasonable edge will do it seems, the Holy Grail is not required!
In short, we have ALL the ingredients right here with Marc and Dean. This is not sycophancy, it’s just a fact. Rather, the pertinent question should be, do their methods suit your individual psychological make-up and the style of trading you want to engage in and/or enjoy? If they do, then you/me/we have no excuse not to succeed!
However, my point is this, part of Tom Strigano’s job as Chief Trader at a big bank, was to fire traders who didn’t make their numbers. He states that they always knew it was coming, strikers know when they are not scoring goals, and being prepared, took it in their stride.
However, one day, when having to “let go” a senior and previously very successful trader, the realisation that forms the quote “Everyone gets what they want from the market, including losses” struck him like a ton of bricks. He saw that the cause of success or failure is inside each trader, and that some people just love to be victims.
He knew this particular trader’s personal story and he knew that in this particular chapter of his life, the trader wanted/needed “attention”, and was now placing himself in the middle of a “drama”!
I am no psychology expert, but it seems, somehow or other, the key to our financial, and even to our deeper personal success, lies not in external conditions or some secret formula but within each of us; and that this fact is very very relevant indeed to the activity we are all engaging in and to the market place we have all entered into.
The 10 Minute Forex Wealth Builder and the M1, M2, Plan B methodologies or whatever else we may find along the way are only 30% of the equation, at best! As Socrates taught, it all seems to revolve around the notion “Know thyself”.
Fortunately, both Dean and Marc absolutely know this and both provide excellent and indispensable guidance in this area of psychology and money management, the area which arguably constitutes 70-80% of the game.
l am a novice and certainly not qualified in any way to even attempt to offer any additional advice. However, in my wanderings and meanderings through the world of trading and in the “outside” world at large, l have stumbled on one or two interesting titbits that could be helpful in a general way and add something to the already existing mix. I’m sure you have too. So if l don’t end up dodging rotten tomatoes (and l don’t mind how you pronounce that word!) for this article, l would be happy to submit a Part 2 and/or read any contributions from others on this topic.
Michael Standen.
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