Having no strategy is a recipe for disaster
In this weekly video:
00:25 – Why people trading without a strategy is a disaster ready to happen
01:30 – When you learn how to drive a car you get tuition
02:25 – You’ll end up crashing
03:00 – Understand the market first
I'm going to explain why trading the Forex market without a proven strategy really is a recipe for disaster, so let's get into that right now.
Hey, traders. Andrew Mitchem here from The Forex Trading Coach. We're video and podcast number 296.
Going to explain to you why so many people get into trading without a proven strategy, and why that almost always is a recipe for disaster.
Why people trading without a strategy is a disaster ready to happen
Why talking about this subject? Well, it comes about because the last week, I've held two live, free to the public webinars with my colleague Paul Tillman, who's based over in the US. On those webinars, we asked people to explain to us what is the biggest issues that's holding you back as a Forex trader? What's your number one problem?
While people had things like money management, a lack of time, and the psychology behind trading, not having confidence in their system, the whole lot really came back to the biggest problem was people don't have a strategy. They don't know what they're doing. They lack knowledge, and therefore when you think about it, no wonder the stats say somewhere between 90-95% of all Forex traders lose money. It's quite scary, really, because people enter into this without really knowing what they're doing. It's not good.
When you learn how to drive a car you get tuition
Let's try and change that. Think of it this way: if you went to drive a car, you'd want to know what you're doing. You'd want to know some rules, you'd have some knowledge about the vehicle, some rules about the road, how the vehicle worked, what you need to do, how you start it, how you drive it, how you accelerate, slow down, corner, reverse, all those type of obvious things as car drivers and vehicle drivers, we fully understand.
Think about to when you started to learn how to drive, how scary that was. But of course, probably what you did is you got some help, you got some tuition. Whether it was a professional driving company or friends or family, someone taught you how to drive. What to do, how to get into gear, how to accelerate, how to put fuel in the vehicle. All those type of things that you just normally take for granted.
You’ll end up crashing
Trading's exactly the same. When you don't know how to drive, you'll end up crashing. When you don't know how to trade, you'll end up crashing. They both hurt. One hurts physically because you're getting smashed up. The other hurts financially and emotionally because you're getting smashed up. It's exactly the same, so just think about it in that way. Go back to thinking when you first started driving. If you've got kids and they're old enough, think about how they're driving and how scary it is sat next to them, because really, they don't know what they're doing. But you're trying to help them along, and trading is exactly the same thing.
Understand the market first
What I really, strongly urge you to do is when you want to get into trading, make sure you understand the market first. Make sure you understand the strategy, make sure you understand what works for you. Don't just jump in and throw thousands of dollars into a trading account and then blame everybody, blame the market, blame the broker, blame everybody else apart from yourself. Because the problem is unless you've sought help and support from a proven strategy, a proven mentor, a proven system, then the disasters are likely to happen.
Think about it this way: when it comes back to cars again, if you know how to trade, you can then drive any car you like, because you've made enough money from your trading to be able to do that, and to put plenty of fuel in it. Off you go to have fun. A lot of it comes back to taking it steady, taking it very slowly to start with, understanding what you're doing. If you get all the foundations right, like with anything, if you learn how to do the foundations of driving, then you have years of trouble-free driving and lots of enjoyment. No different to trading.
I'll leave you with that. If you need any help with your trading, you know where to find us. This Andrew Mitchem from The Forex Trading Coach.