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Sunday, November 21, 2010

The Value of Protracted Training Revisited

FAILING SUCCESSFULLY ON THE MARKETS

“One particular study… was with 78 German pianists and violinists. They did long term experiments and separated the musicians into different groups. They found the best group had spent an estimated 10,000 hours practicing compared to 5000 hours for the group that was considered average or mediocre. In studies of chess masters the same thing was found. It takes at least 10,000 hours to master anything in life.”– Jeff Greenblatt

Hello:

In a series of my past articles titled ‘Gaining An Edge On The FX Markets, Parts 1-5,’ I mentioned protracted training as the number one secret to success in a person’s journey to financial freedom. The inability to make consistent profits on the markets is a problem you must tackle. I’ve drawn a lesson from my personal experience – the exercises that are the most difficult are the ones that are the most necessary. There’s no time limit for trading success, no date for becoming a trading master. That’s why professional traders still make use of simulation accounts. New trading ideas should be tried first on demo accounts. Personally, as a teacher who handles some academic students, I’ve noticed that my best students are those who’ve been involved in serious and consistent coaching for many years.

The sad fact is that most who call themselves trading coaches offer to train beginners for one day or two days or a few days or a few weeks, whereas it takes years to become a successful trader [unless you have a mentor/expert who shows you his trading activity and how to trade accordingly]. The market is a very complex thing. Just ask yourself these questions: If you entered a university as an undergraduate studying law or medicine, how long would it take you to become a qualified lawyer or doctor? How long does it take to master a profession that entails world class competition? Did you know that trading is one of the toughest business activities in the world? Why do people tend to be childishly irrational when it comes to training for trading? No wonder many people fail in trading; they went through ridiculously short training. Many people attend ‘how-to’ and ‘get-rich-quick’ seminars – how to make money doing this, how to make money doing that (Telling people that trading is easy is a blatant lie and an abject form of criminality). Yet reality-based statistics shows that over 90% of seminar attendees don’t succeed after all. The easiest way to become poorer is to try to get rich quickly. This isn’t about trading alone; it’s about any other business runs whatsoever. Common sense should let us know that seminars are good only for creation of awareness and information dissemination, they don’t make anyone a skilled professional in anything. Rigorously practical activities with trainer/trainers are needed to get necessary skills in any area of human endeavor.

“I got interested (in trading) when a lot of people did. The only difference being I stayed with it. I missed the whole real estate bubble. While 90% of the people who lost 90% of their money in the 2000 to 2002 period moved on to real estate. I worked at perfecting my craft.”

Jeff Greenblatt, quoted above, said he and his trading partner(s) went from a market that dropped very easily to a pure trading market where the bias was up and a lot of skill was necessary. There are a lot of times when the market threatens to break down for real but it never does. You can get sliced up pretty good for breakdowns that never happen. Many dues are paid during such time.

Mr. Jeff continued that despite some early challenges in trading, he put in his time and always worked really hard at his weakest link. He noticed that practicing what you’re good at is no big deal. For this reason, he concentrated on his biggest weakness: his impatience and early profit-taking. He admitted that he wouldn’t be where he’s now nor would he have persisted in the though times in the past if he hadn’t proven to himself that he could do it. The willingness to face what you aren’t good at is a real challenge and the only way one ever gets better. Quitting trading because of a losing streak is like jumping off a train before you reach your destination.

Making Progress Through Trading Mistakes

“Most of us grow up in an educational system that brainwashes us to think we’ve to get 94-100% correct to be excellent. And, if you can’t get at least 70% correct, you’re a failure. Mistakes are punished in the school system by ridicule and poor grades. Yet, it’s only through mistakes that we learn,” writes Dr. Van Tharp. Contrast that with a .300 hitter in baseball gets paid millions. In fact, in everyday world few people are close to perfect and most of us who do well are probably right less than half the time. Indeed people have made millions on trading systems each with a reliability of around 30-40%.

Inventor Charles Kettering gave some concise but effective advice on how to handle failure. It’s noted that one must learn to fail intelligently. Once you experience a failure, you got to analyze the flop and find out why, because each failure is one more step leading up to the ladder of success. The only time you don’t want to fail is the last time you try. The following are the suggested ways of turning failure to success: (1) Honestly face defeat, never fake success. (2) Explore the failure; don’t waste it. (3) Never use failure as an excuse for inability to try again.

The "graduation rate" from novice to experienced trader is low, and if you want to be one of the rare few who make it, then you must gain as much experience as possible, and make any necessary sacrifices. So don't hinder yourself from reaching the status of a master trader. Put in the necessary time and effort. You'll be rewarded in the end with lasting trading success.

PS: I told you that the same logic that works on the GBPJPY also works well on the USDCAD, the proof would be shown in less than 2 weeks from now, after which you'll start receiving signals on the USDCAD as well [for profits optimization]. The more difficult and unpredictable the markets are, the happier we are! Please watch out. I have Americans in mind as well. Yes, Americans are great indeed and for their benefits and for you as well, I'm going to make a login and password of an account available. I'll explain the logic behind the strategy used for it, while displaying the past results. The system is a simple income generation tool and NFA-compliant. You'd simply see how I open and close trades with real time data, and you can do so accordingly. Please watch out. I'm really committed to see you survive on the markets.

Also watch out for an amazing interview with a highly experienced trading coach, next Friday.


The quotes below end this article:

1. “The markets are going to reflect the conditions and circumstances that are present in the order flow; and you'll want to accept the reality of the charts rather than assume that the reality will change merely because you want it to. The price action should do exactly what it does, based upon the market conditions and circumstances present. So it is also with your results. You are going to get the results that you "should" get, based upon the personal conditions and circumstances present in your trade. In other words, you executed your trade in just the right place, based upon just the right assumptions; and followed your rules – or not – in just the right way, in order for you to get the exact results that you did. And if you lost, you "should" have lost based upon the personal conditions and circumstances of your trade. As soon as you can "accept" the reality of the market and the reality of your causal behavior, you'll be able to accept that you are getting the results that you "should" get. With this acceptance you'll be in a better position to pay better attention to the conditions and circumstances that you are setting in motion at the time of the execution.” – Dr. Woody Johnson

2. “Not every trade is a profitable trade, some are losses which is fine. As long as your average profit is larger than your average loss and your winning percentage is decent, who cares about a win or loss, just run your profitable strategy.” – Sam Seiden

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Senior Analyst

FX Instructor, LLC

Email: amustapha@fxinstructor.com

Yahoo! Messenger ID: saazalmu


Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal

Nice trading tips are available at: www.ituglobalforex.com

And my past articles are also available at: www.ituglobalforex.blogspot.com

NB: There is risk of loss in trading, but it is possible to be a successful trader.

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