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wisdomEarlier this week I was thinking about all the emails that I get from traders who are frustrated and confused about how to succeed in the markets. I began to realize that most traders simply think way too much about trading and thus drastically over-complicate the process of trading and making money in the markets. So, I began to write down some pieces of insight that I have learned along my journey as a Forex trader. After about five cups of really strong coffee I condensed my scribbles down to the following four pieces of trading insight that I think you will find quite helpful…

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• Forex trading success is defined by consistency

One of the first things that struck me during my caffeine-infused contemplation this week, was that most beginning Forex traders simply put too much pressure on themselves right out of the gate. It seems as though everyone wants to be a “pro” trader right away. While this is indeed a noble goal to have, it is just not realistic to assume you will easily be able to make a full-time living as a trader right away.

I think you need to ask yourself, “What’s wrong with just supplementing my income each month?” Honestly, what is wrong with that? Many beginning traders seem unhappy with just making some extra money each month to supplement the monthly income from their jobs or to slowly build up their trading accounts. Thinking you will be able to quit your job and trade from the beach after one month in the markets is analogous to thinking you will be able to perform open-heart surgery without ever going to medical school. I urge you to realize that your chances of success as a Forex trader are far greater if you will accept slower and smaller but more consistent gains each month, rather than trying to go “pro” without any training, fortitude, or money behind you.

The classic fable of the “Tortoise and the Hare” is a good analogy to trading; the tortoise wins the race in the end because he is slow but consistent, whereas the hare decides to take a nap and losses his focus on the race. In trading, if you lose your focus on being consistent and instead try “betting the farm”, you are sure to end up losing to those traders who behave more realistically and consistently than you.

• Good trading should be effortless

The ironic thing about trading is that the harder you try the more you tend to struggle. Think of it like a pit of quick sand, everyone knows what happens when you move around and struggle in quick sand; you sink faster, whereas if you stay still you buy yourself more time to hopefully get out of the pit.

Traders who have their strategy or system mastered and who are totally comfortable with the risk they place on every trade, are not stressed or overly-anxious, and their trading is thus effortless. If you have a detailed and effective forex trading plan that you actually follow, you will already know exactly what you are looking for in the market, what you could lose on any one trade, and what your entry and exit strategies are. Since everything is predefined, there will be no catalyst to cause you to struggle and meddle with your trades; otherwise known as trading emotionally.

Good trading should not only be effortless, but also somewhat boring. If you aren’t risking too much on each trade, you are unlikely to feel “excited” or “afraid”, this is actually a good thing. Traders who are glued to their screens all night watching every little increment of price movement are typically the ones risking too much money. Swinging from feelings of euphoria to extreme disappointment or rage is not characteristic of a consistently successful trader; if you are experiencing these emotions in your own trading it means you are a gambling.

win-loss• To win at Forex trading you must embrace losing

Another very important piece of insight that I feel many traders aren’t aware of or simply choose to ignore, is that you have to know how to lose if you want to make money in the markets. There is no “holy grail” trading system out there; in fact, most very successful traders only win around 60% of their trades, that’s it. You can make money winning a much smaller percentage of your trades though. For example, if you achieve a risk reward of 1:3 on all your trades, over a large enough sample of trades, you would break even while losing 75% of your trades. So you would only need to win about 26% of the time to make money on a risk reward of 1:3….if you know how to lose properly.

Example:

Risk: Reward = 1:3, $100 risk per trade, 100 trade sample =

74 losers x $100 = $7,400 loss, 26 winners x $300 = $7,800 gain = $200 gain, winning only 26% of the time.

So what’s the point of this you might be asking? The point is that you can lose more trades than you win and still make money in the markets. In fact, if you win 50% of the time you should be making quite a bit of money if you have a risk reward of 1:2 or greater. The reason so many traders lose money is because they simply will not take small losses, or they don’t fully accept the risk on any ONE trade.

You should go into every single trade assuming it could lose, because it could! This is yet another reason why the set and forget trading method is so effective; it teaches you to lose responsibly. The truth about Forex trading is that you are going to lose trades, no matter what you do, you are going to lose, so you have to do it in a calm and calculated way, otherwise you will end up moving stops further from entry and letting small losers snowball into big losers.

Also, moving stops to breakeven is often not done correctly. Many traders move to breakeven just out of fear of losing. This is the wrong reason to do it. Moving to breakeven should really only be done once a trade is up at least one times risk or more; not as soon as possible. I rarely move to breakeven because I fully accept that losing is part of the game and that any trade could lose; you have to embrace losing if you want to make money long-term, so you really just need to accept that you will have losses and get over it. Trading will only become more difficult for you if you constantly struggle and try to avoid losses.

• Wait for the right time to strike

The final point that I contemplated while on my last cup of coffee, was the fact that above any other trait of successful forex traders, patience is probably the most important. To put it simply, any very successful trader is also a patient trader, and they understand the importance of patience.

You should think about your trading like you are a lion in the wild, stalking your prey slowly but with sure steps. Lions don’t try to take out a whole herd of zebras at one time; instead they scope out the entire picture and find the easiest targets; which generally means the weakest of the herd. This is exactly what you should do as you trade; you should analyze the market according to your trading plan, and only take price action trading setups that are the “weak prey of the herd”, in other words, the ones that are obvious and sticking out like sore thumbs.

The final point I want to make is that when you pick your trades wisely instead of over-trading; you are preserving the money in your trading account to use for the “obvious” setups that are higher-probability. This clearly all hinges on knowing exactly what you are looking for in the market, so if you learn from a systematic trading education course, and master one strategy at a time, you will have a much easier time stalking and trading the “weak” prey as opposed to trading with no formal education or structure behind you. If you want to really learn what to look for in the markets I can teach you an arsenal of high-probability price action setups, but it will be up to you to exercise the proper discipline and patience while trading them. You can find out more information about my price action forex trading course and members trading community here

nialfuller

About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008.
Checkout Nial’s Professional Forex Course here.

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49 Comments

  1. AMIN MALIK says:

    Hi NIAL, Your emphasis on “Slow but Consistent” and
    “To Wait for the Right Time to STRIKE” are worth to
    comprehend and to follow in letter $ spirit.
    Warm REGARDS

    AMIN MALIK

  2. Intazar Hussain says:

    You’re absolutely right about accepting losses in a trade. Simply brilliant ! Wish the above message can be recorded and i would play it over and over and over in my head.

    Best Regards !!

  3. Igor says:

    Many times we have read trading lesson like this, but it is never enough. Great to have you Nial as a mentor.
    Thanks.

  4. Zoran says:

    Hy Nial,

    Short, clear and concise, to read at least 10 times!
    simply Brilliant ! Great share Nial ..

    Best regards !

  5. Yogarajah says:

    Hi Nial
    Another wonderful article with wonderful examples. Brilliant.

    Thank you

  6. Emeka says:

    Hi Nial, l commend you for this tutorial. You are indeed a great trader. Your enormous experience is on play here. Thanks.

  7. Pavel says:

    Another nice piece :),have a good one Nial

  8. jon griffin says:

    an updated variation/combination of earlier articles !
    true true, keep spreading the word, and ease up on the coffee, that much can’t be good !!!!

  9. Shyam Thapa says:

    all hidden gems of trading are found in your article.
    one of the best article that i have read so far.

    Thanks
    GURU ji

  10. Piotr Janiga says:

    Hi Nial,

    Thanks for another great article.. don’t drink too much coffee
    master it’s no good and you know we need you!!!

    Take care!!!

    Piotr

  11. emma says:

    Nice one Nail… it goes without saying..that patience and discipline is KING in trading.
    Thank you.

  12. ironn says:

    Great One my friend as always!!

  13. Frank Page says:

    Nial, Great Article! I really enjoy reading your stuff every Saturday morning after the week’s close. It’s good to reflect on what is required to be/ remain successful even if I’ve heard it all before! The present market volatility is presenting many good opportunities at the moment for those who have the skill and disciplne to catch the moves! Looking forward to next week.
    Good Luck!!

  14. Marvin Hacker says:

    Nial,

    Thank you for the lesson!! I have trouble being patient. Thank you for teaching us to “keep our powder dry,” saving it for the stalking of the high-probability setups.

    Best regards,

    :) Marv

  15. Imz says:

    Great article! Very informative

  16. Geoffrey Irwin says:

    Hi Nial
    Still plodding, still learning. Break even and look for the highest probability have been a problem. Thank you for making the picture clearer for me. At least I accept losing trades but need to learn how to cut losses when I know my stops will be hit!!

  17. John says:

    Nial, thanks for the reminders, it’s easy to forget them in the heat of trading!

  18. Russell says:

    Well said again, Nial. I think every new trader can relate to and learn from what you say. Using your teaching I’ve closed TWO 1:3 trades this week that MORE than made up for a losing trade last week. I love being part of your community and I thank you for all that you do to teach others the right way to trade.

  19. xback says:

    Thanks Nial…Great article…
    I need more advices here..

  20. krastev says:

    thank you Nial for yr great lesson.

  21. nice says:

    Very nice Nial I can see the passion within again :) Great write, simple, plain and truthful *thumbs up*

  22. Anton says:

    Thanks Nial,

    excellent article. Your style of trading and explaining trading is like japan swordplay – simple and perfect. Do what you do – you do it well. What brand of coffee do you drink before writing article like this……… ? :)

  23. T Allen says:

    Good Article Nial – you have surely spoken to me this week. I have done well over the past months but lost on EVERY Trade I took this week. I have never gone a week without at least one winner!! This is a time for me to embrace losing.

  24. Mike says:

    When you view Trading as a way to supplement your income it not only makes you a better trader, but it gives you more confidence at work or school. The discipline you learn from trading effects all aspects of your life.

    I’m an entrepreneur and a student; I have not taken one class at the university, or have seen anything of greater value then what NIAL will teach you.

    PERIOD

    MP

  25. Kirk B says:

    Thanks for this article Nial. This article really captures the “Holy Grail” that everyone is searching for. The hard part is having the discipline to actually follow these simple yet very difficult principles. I think I’m going to print this out and read it at least once per week to imprint these principles into my subconscious.

    Thanks,
    Kirk
    Phoenix, AZ

  26. Daljit says:

    Hi Nial,

    Very well said, we keep on making the same mistakes again and again. Patience and discipline are the key to success.
    Thanks again.

  27. Charley says:

    Great Article, you have reshaped my trading and P&L – I now concentrate on core levels and wait like a hunter/sniper for the PA signal to occur at that level.

  28. Jack says:

    Good article. I especially liked the point about accepting losing trades. There are some people out there who simply cannot do that, no matter what the ultimate gain – they just aren’t comfortable with any investment that isn’t guaranteed profitable. I’ve learned to tell those people straight out that trading is not for them.
    I made an excellent living as a futures trader (before I took up forex trading) winning on average only 2 out of 5 trades – my average losing trade was only $300, whereas my average winning trade was over $1,000.

  29. Thulani says:

    Dear Nial

    You are GREAT!!!, you simplify everything.

  30. olajubbu says:

    U are too much.Thanks for this great advice

  31. Galen says:

    Hello Nial

    Like a good parent your advice is sound and put forth for our safety, but as a naughty child we don’t always follow our parents advice until it is to late; lesson learned.

    Galen

  32. TRACY says:

    I have a question, Nial. Umm, can you pick my next big winning trade for me?…lol… Nah, just kidding! Another platinum hit , Nial. THANKS “SOOO” MUCH!

  33. Raj says:

    Hi Nial,
    Once again, a great article from you.
    Patience and discipline IS the key to success.
    You make learning easy and simple.

    Thanks and regards
    Raj

  34. Jiri says:

    Great stuff,thanks.

  35. Thm Trading says:

    Hi Nial
    Yet another repetition, of the most important things in trading

  36. Don says:

    Hi nial, I have just added set and forget as the first option in my trade management plan. That rush to move to BE has f#@$ed a few clean and obvious trades for me.

  37. kotijett says:

    as always Nial another great article… thankyou!!!

  38. Tomson says:

    Thanks Nial,

    Thanks for sharing and pointing out what is important to be aware of in this business.

    Cheers
    Tomson

  39. yvan says:

    great article as usual Nial. You are definitely an authority in forex!!!!

  40. akpos says:

    sound advice coming from a sound trader….thank u very much

  41. Sanjay says:

    Nice one mate. Some sound advice there.

  42. Jim Foster says:

    Spot on as usual Nial…. I have recently moved a stop loss to the breakeven point and in hindsight I should have waited.

    Useful as ever!
    Cheers
    Jim

  43. akmaL says:

    simply Brilliant ! Great share Nial ..

  44. Gurpal says:

    Hi Nial,

    Hope you are well. A fantastic and great lesson.

    Thank you for all your help

    Thanks and Regards

    Gurpal

  45. Adi says:

    Fantastic advice – as always. Well done Nial.

  46. Brian says:

    Great article. “Lose responsibly” love it!

  47. KRISTOFA says:

    Dear Nial, you have given another angelic light to my trading.
    The difference between your mentor ship with other professionals is that you are sincerely truthful, never compounding the confusion in our heads. Because you teach price action your lessons are very clear and to the point. This lessons is one among your best(s). I have confidence in you. Thanks
    OKENTA

  48. Uche says:

    Well done Nial! This a great writeup,if we fail to plan we plan to fail, its been amazing following your advices and tutorship for a cool one year and my trading result has been awesome.
    Thanks bros keep it up! And remain blessed

  49. Dave says:

    Niall this is a really sound article. You have put into words what it has taken me 15 months to realise myself. If we follow your advice here we will not go too far wrong. Thank you very much for all your efforts on our behalf.

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