FX COACHING
philosophy that what you’re getting
from mainstream media
and what we consider common knowledge is totally wrong. What we need as traders is a scientific approach to our decision making.
When I first heard
Tom
use the term “ scie n t ific a ppr o a c h ” I
got really
excited because my company holds the same view and we’ve been working with currency traders for years
building
and developing strategies that we believe meet the scientific standard.
It’s tough to wrap your head around but over the past 5 years I’ve worked with more than 20,000 traders in over 80 countries and what I’ve found is that all of them suffer from the same basic set of issues. If you were to ask them what the problem is they would tell you it’s that “they don’t have a good trading system”, or that they just “don’t have that one little nugget of information
What we need as traders is a scientific approach
to our decision
and fundamental data instead of focusing on what really counts.... probability.
I’ll give you an example. What if you discovered a way to guarantee an 80% chance of being right every time you bought the EUR/USD? Would that be a strategy you’d like to hear more about? What if you
70 FX TRADER MAGAZINE January - March 2014 making
that will suddenly make all the confusion clear.”
In reality what they lack is a clear plan. They’re uneducated about WHY the marked moves. They focus far too much on news
also learned that every time you took that trade you would end up risking 1 dollar for every 1 dollar you made giving you a 1:1 risk/ reward ratio?
You would basically have a strategy that risked $1 to make $1 and you would be right 80% of the time. How many times would you want to take that trade?
If you
said anything less than 100% of the time you need to get out of trading because you’re nuts.
But you see, most traders have never sat down and q u a n t ifie d what their probability of
success will be. Because of that most of them bounce around from one trading style to another. Trading each one until they go into a drawdown and then bouncing to another in a hopeless attempt to avoid the pain of losing money.
What real education does is teach you how to quantify what you’re
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