Knowledge in Forex Trading

By: Sacha Tarkovsky

I read all the time about how important it is to learn lots of information to trade forex and how you continually need to learn, but this is NOT true.

Succesful Forex trading is actually very simple and the knowledge is easy to acquire, yet 90% of traders lose - so why is this ?

Because knowledge alone is not enough, furthermore you need to learn the right knowledge and most forex traders don't.

There are plenty of very smart people who lose and plenty of small potato investors who make a lot. The fact you have a lot of knowledge or are clever does not ensure success and in most cases ensures you lose.

Let's look at this in more detail.

The right knowledge

Is not hard to acquire and starts from learning yourself and not trying to get a short cut to success by buying it - if you think you can buy success you are going to lose.

Trading means getting knowledge that works and you can have confidence in.

Your aim is to make money, not be clever and you can build a simple system from free resources on the net.

Simple systems beat complicated systems as they are easier to understand, easier to apply and make more money as they are more robust.

Fact is most of the top traders in the world use simple systems.

We have been traders for over 22 years and our system is simple:

Trend lines, support and resistance to spot trends and 3 confirming indicators and that's it and it works.

The right knowledge is easy to acquire but the trick is you MUST understand it, to have confidence and this gives you the trait that most traders lack.

Discipline

If you try and follow someone else you won't have confidence and you won't be able to follow a system with discipline.

Unless your knowledge is acquired by you and you have confidence, you won't be able to follow your trading system through losing periods. You will simply throw in the towel

Discipline sounds easy to acquire but it isn't - it's extremely hard to hold your emotions in check.

How do I get the RIGHT Knowledge

Forget all the e-books, courses and other forex education sold on the net.

Go to Amazon and get some books by top traders, who have walked the walk rather than simply talk the talk.

Most sold info on the net is not worth the money and you can get far better knowledge cheaper at your local bookstore.

Good books to start with are Jack Schwager - Market Wizards and New Market Wizards - the interviews here are all with legendary traders and is a great inspiring read.

Then get some books on trader psychology.

I am a big fan of Jake Bernstein who really shows how important and elusive getting the right trading psychology is and really hits it home.

Another favourite of mine is Trader Vic by Victor Sperandeo, a fantastic book covering all you need to know from money management to system building.

Done that?

Then go on the net and build a simple system based around technical analysis, a breakout methodology find a few indicators you like to confirm trend momentum and you're all set to go.

Sounds simple?

Building the system is the easy part - getting the right mindset is the hard part - good luck.

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