3 Facts Most Forex Traders Don’t Know
So you’ve been trading for 2 years, wiped out 3 accounts, and still lack the ability to trade forex successfully. Unfortunately this is a story we hear way to often. The good news is failure doesn’t have to be your fate. One of our long term members sent us his profitable track record for the last 3 months which is the inspiration for this article. Over the last 4 years he had tried every mainstream trading strategy out there but never achieved success. How was he able to finally produce consistent profits, and more importantly for you how can you do the same? Through this article we are going to break down 3 facts most forex traders don’t know, and what you must know to have any chance of consistent success.
Fact #1: The Mainstream Business Model Isn’t Working
Below is the very latest US Forex Broker Profitability Report which is for the 4Q of 2012. During the final three months of 2012, 34.29% of all forex accounts were profitable. Lets say for example you have 1,000 traders and they maintain the same 34% chance of profit each quarter. After the first quarter that would leave 340 profitable traders. After the second quarter you would have 115, 39 after the third quarter, and finally after a year of trading there would only be 13 profitable traders out of the original 1,000. For the sake of argument lets quadruple this number which leaves us with roughly 50 profitable traders out of the original 1,000 in our example. This comes out to a 5% chance of success after a full year of trading based on the latest data from US forex brokers.
Why is this information important? Our entire goal is to treat our forex trading like its a business. If you decided to start a business, would you ever risk your hard earned money if you knew there was only a 5% chance of profit after the first year? The bottom line is that mainstream trading strategies are failing traders. I’m certain most will not listen to me and will continue to trade with a chart full of indicators. I’m also certain that those same traders will continue to fail. You cannot repeat the same thing over and over and expect different result, rather you have to change your actions to achieve different results. As a trader that means giving a serious evaluation of the trading strategy or methodology we are currently using.
Fact #2: Forex Brokers Reveal Losing Strategies
The truth is often hidden in plain sight. As most of you are well aware, the majority of forex brokers trade against their clients. This makes the brokers business extremely lucrative as most traders will fail in the long run (described above). As a result of trading against the client, brokers make each trader sign a ‘Counterparty Disclosure’ before you can begin trading live. This counterparty disclosure says that not only will they “make more money if the market goes against you”, but they also state that “you should carefully evaluate any trade recommendations you receive” from them. Essentially they are making you sign a document that says ‘you shouldn’t trust anything we say because we make our money when you lose yours!’ How can we benefit from knowing this information?
The most simple and straightforward way to benefit from this knowledge is to look at the free education that most brokers offer. Why should you look at the education they promote? Because a broker would never teach their clients something they knew was profitable. This would kill their profits and run them out of business. Therefore the simplest way to identify a losing strategy is to look at what the brokers are teaching. Have you ever seen a forex broker teach their client about market manipulation or tracking banking activity? Why do you think that is? The bottom line is tracking banking activity gives the average retail traders the best chance of success.
I’m sure I’m going to turn people away that want to remain in fantasy land but the truth is the truth. If you are dead set on your trading strategy you need to ask yourself why? Do you have a history of profit? Do you know for a fact others are profiting with it? Are you just going along with the masses? Far to often I see traders attached to mainstream strategies because they are popular. If you look at the chart above and you’re honest with yourself then you should run from trading strategies that are popular!
Fact #3: Banks Control The Forex Market
The third fact most traders don’t understand is that the banks rule the forex market. The chart to the right shows just 10 banks controlling more than 70% of all daily volume in the Fx marketplace. The bottom line is if you fight the direction the banks are going to move the market, you will lose. This is not my personal opinion, this is a statistical fact based on simple numbers. The banks control the volume, and consequently they control the intra-day trends. The great part about this fact is that you can profit from this information! How?
The first way we already discussed above…..stop using mainstream trading strategies that have failed you. You cannot continue following the same path and expect different results! Next you need to begin the process of understanding banking activity. This is not complicated but it does require effort.
The entire focus of Day Trading Forex Live (DTFL) is geared towards tracking banking activity. We believe there are only two types of traders. Traders who understand market manipulation, and those who are the victim of it. Banks are the single largest driving force in the forex market. Because the banks drive the forex market we must learn to trade with the banks to achieve long term success in trading. Trying to trade without a proper understanding of how the market actually works is like trying to paddle a boat up stream. You may make a little head way, but in the long run the river will always win. The banks represent the river which is a force we cannot fight.
If this is your first time visiting DTFL I would urge you to go through all the articles and training videos on the site. You will find a massive wealth of free information that details the bank trading strategies more fully. When Chad or I put together an article or video we do so with the goal of conveying solid information that is time tested and proven to work. Why do we put so much effort into the content found on the site and helping traders? As cliche as it may sound we have seen it change lives and fulfill dreams. If you would like more advanced information on tracking banking activity as well as daily support you can check out our Forex bank trading course and live members community.
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