Forex - The Real Deal or Fools Gold? Part 1

People come in all shapes and sizes, but some things are universal. We all want to improve our circumstances for ourselves and those we love.

Forex seems like the pot of gold at the end of the rainbow, promising untold wealth and freedom from all our problems. But the shocking statistic is that for most people it turns out to be fool’s gold, and with very good reason, because 95% of new traders lose all their capital in the first 90 days.

And yet, Forex really CAN deliver – it’s just that most people don’t really know what they 'need' to know to really be successful at Forex, and it is this lack of clarity that proves their downfall. Everyone comes into Forex thinking that they are smart enough to 'pick it up.'

They mistakenly believe they are heading for the pot of gold at the end of the rainbow simply by 'second guessing' the market. This is, without doubt, nothing short of gambling.

Unfortunately, people DO come into Forex looking for a free lunch – little do they realize that often, they ARE the free lunch.

Very little Forex training educates new people about what REALLY matters. There is a tremendous difference between teaching people 'all about Forex' - and teaching people how to 'make money' from Forex. In fact, the two things are poles apart.

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Beat the sharks before they eat you alive!

But, as in many other walks of life, where there is investment money available, the sharks gather in droves to gobble it up. "We'll teach you ALL ABOUT FOREX" they shout from their gleaming shiny websites with the gleaming shiny 'wonder system' that just 'can't fail'.

Like the wolf in Little Red Riding Hood who tried to hide his teeth and claws from the unsuspecting little girl - there are MANY people out in cyberspace just waiting to eat up the newcomers to Forex. Is everyone like this? No, of course not, but for every decent training or mentorship program, there are multiple numbers of people who simply want your money and have no commitment whatsoever to your eventual and consistent success.

Ask yourself this question. If it's reasonable to assume that almost every Forex newcomer buys into books, cd's or training courses that promise a wonderful way to make a killing at Forex - how come over 95% of these people lose their capital in 90 days? Doesn't that sobering statistic make you stop for a moment and think that there must be something wrong here?

Once again, the truth is that learning 'all about forex' does not mean the same thing as learning how to 'make money' from Forex. It’s hard to admit this, but it's not complex systems, indicators or gurus that count - it's simplicity, patience discipline and a clarity of purpose - more on this later.

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Most people starting out in Forex either don't have the vaguest idea what it is that they're after - or they have their sights set on 'making a million'. Most people overtrade, revenge trade or live-in-the-hope that losing trades will somehow magically turn into winning trades.

This is such a common illusion. It always results in capital inexorably eroding until there's nothing left - the worst feeling in the world. There's no feeling that compares with the dread and panic that sets in as your money disappears into the bottomless pit that waits at the end of every negative trade.

It's one of the worst feelings in the world - and it leads to the worst kind of spiraling negative-trade-syndrome, as the harder we try to recover, the more losing trades pile on top of yet more losing trades until capital is almost gone and we are afraid to risk trading again in case we should lose it all.

Approach Forex in the right way and success will follow

There is, of course, another way to approach Forex. A less stressful, less dramatic, but far more sensible and safe way to begin trading. It involves taking a long hard look at what it is - exactly - that you wish to achieve from your foray into Forex.

It's not realistic or good enough to simply say, 'I want to make more money' or 'I want to get rich', or even, 'I'd like to be able to give up my J.O.B'. It's necessary here - and before you start live trading at all - to really think about what you want to achieve at first from trading. This involves a real money-management strategy allied to a real business plan. In other words, establishing clarity of purpose.

In short, it's crucial to find out exactly what your daily or weekly target is, so that you establish achievable trading goals which, when reached are the switch that turns off your trading efforts for that day or week.

Why would you want to 'turn off' trading effort at a certain point? Well, this is quite a thought provoking argument. We are all conditioned to believe that the more we try, the harder we work, the more successful we'll be at whatever it is we are trying to achieve.

So if, for example, we could reach our daily Forex earnings-target in an hour each day - it seems sensible to say that if we worked for eight hours, we could earn eight times as much. The harder we work, the more successful we are - right?

Wrong! In Forex, invariably, once you have your target you take a dreadful chance that you will trade on, only to lose it and then spend the rest of the day playing catch-up, overtrading and probably ending severely negative. In Forex, the harder you try, the more money you lose. It's 'Sod's Law' personified.

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This is such a difficult and hard lesson to learn - but it's the key to running a successful Forex business. And isn't running a successful Forex business what this is all about?

This is why patience and discipline play such an important part in the life of every single successful Forex trader that there is. No successful Forex trader is a 'chancer'. Discipline, patience, good money-management and a business plan are the prerequisites of success.

Now - take these things and add in the incredible compounding effect that a good money-management strategy will take advantage of, and you turn on the power of leveraging more and more money in a wonderfully stressless way, on a daily basis.

It's wonderful stuff! This is about looking at a business plan that takes your existing capital and compounding it safely to a point where you could not only produce a replacement income - but even more crucially, compound your capital month-on-month as well.

Please reflect on this for a moment before proceeding to part 2 of this article. The formula for success is - Income and capital growth from compounding a targeted, relatively small goal, regularly with discipline and patience.

Read part 2 of this article >

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