"So desperate to avoid a loss and so desperate to book a profit , I lose the bigger profit, so much so it feels

like a loss."
10 Forex Sins and Trader Types
Most traders fail due to a catalogue of reason but the main underlying cause is not having a solid trading
plan. Approaching the market as a gamble is all well and good but in order to succeed at trading you must
have 4 things to hand. 1) Your entry points 2) Your exit points 3) Your profit points 4) Discipline to follow.
Everything else Data releases, Federal reserve speeches, Technical and Fundamental analysis etc you learn as
you go along. However without those four things your task becomes harder. We have questioned many
successful traders and the key element to what was the key to there success can be summed up in this
traders answer, I like a million others, suffered the trials and tribulations of learning the game, days of
brilliance versus days of stupidity. I wasnt successful until I learnt to take myself out of the game and rely
on my trading methodology and plan. My trading plan was fine, it was me that was problem. This reminds
us of a quote from the book PitBull by Marty Schwartz. Do you want to make money or do you want to be
right? Dont beat yourself if youve got a plan that works stick to it.
Listed below are 10 reasons why the Forex Safari beats the ordinary investor. The Forex game is to take
advantage of a trader's naivety and exploit what a million other people have done before and will continue to
do. To the unknowledgeable the Forex Safari will consisently inflict as much pain on a trader's position to get
him to quit and part with his money. It's becoming very clear that Forex has reached a new level of exposure
and like fools in love theres money to be had, be careful because no one cares how much you lose. Only the
top 2-3% win at this, the rest you never hear about.
1) Trading the News: Is great fun if you win, but do you ever wonder why or how it moves 100 points
within a second of the release? How can that many orders in the same direction be placed within a second of
that release. How can it hit your stop and bounce back to where it started? Why because every Hedge Fund,
Investment house, every pro trader will have his own trading plan for that news release. They know what has
been priced in, what's expected and in some cases probably already know. They will have itchy fingers on
sell if xyz, buy if it's xyz, flat if it's xyz , buy if the price hits xyz, sell if the price hits xyz. Now the real
question is do you know what a -1.5 instead of an expected -1.2 means to the market, no? Do you know what
has already been priced in? No? Then how do you expect to be successful trading the news? While learning
you cant, learn and watch it. The news releases are a great gamble but when T the BOE throws in an
unexpected interest rate rise and a 150 move in a blink of an eye, there isnt a broker in this world who will
fill you when and where you want to get out. 4 Simple Methods to Learn
2) Over Leveraging:
Why or why oh why, the best hedge funds in the world look to gain 5% to 15% year on year, yet the
inexperienced Forex trader believes that if he can get 10 points a day, compound this every day and low and
behold his 4 figure sum is now a Million and two in 14 months. Sounds like a lottery dream, it is. Keep it
small, the market will always be there, and it's testimony is that that over the decades millions, not thousands
of traders and investors have found this out the hard way. The number one aim is develop consistent winning
trading habits. Account Size & Overtrading
3) Guessing and Getting Lucky: Ah-ah it's going down sell. Ah-ah i'ts going up buy.
Like fools gold nothing will wipe your account out quicker than guessing. Like a coin toss of heads and tails
you will hit a roll of 12 heads on the trot and think youre the next Marty Schwartz. Sorry theres only one
Marty Schwartz and he didnt do it by guessing. Guessing
4) The Circle Trade: Trading Without a Plan
Not taking a Loss
Not taking a Profit

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Watching a Profit become a loss

Watching a Loss become a bigger loss
Taking a loss only to see that that loss is now a profit. Kicking yourself for being right and re-entering the
market.
And the circle continues .
Not taking a loss ..

How to Develop a Forex Trading Plan

5) Revenge Trading: Trying to trade your way out of a loss.

All I need is 30 points to get back to even for the day.... All I need it 40 points
If you're losing stay out. Losing days have a habit of becoming large losing days.
6) Second Guessing: Probably the worst habit to develop as a beginning trader. You will become richer far
quicker if you had stayed smaller and accepted that there is no wrong or right, just profit and loss. Take your
position, honour your stop, honour your limit, because if you actually believe you know what the price is
going to do your second guessing, let your trading plan run it's course.
7) Over Trading: 23 trades in a 30 point channel, 10 trades around the news 15 trades against the run of
play. Sounds too ludicrous to imagine, it is until you do it. Overtrading Examples
8) No Study: What do you think Jim? Listening to an Analyst or Forum Guru.
The current financial crisis just goes to show that no one really knows anything. 10 years ago there were just
a handful of triple AAA rated companies in the world, in 2007 there were thousands. If Gordon Brown
resigns fine, sell the pound, if the Fed intervene in the currency markets fine, take a position. If Joe Blogs
and his winning forum posts or Mr Xyx of super duper channel catch your eye, stand aside dont be pig in
the middle make your own decisions.
9) Thinking : Thinking the market knows or cares how much you know and care.
A maddened crowd comes to it senses one by one by one, its the same with market. Dont think the market
cares about you it doesnt, a PhD or an IQ of 160 doesnt make a blind bit of difference.
10) Impatience : Jumping in. Dont, you may miss the trade you may miss a profit, but the market will
always be there. Learn to be patient. Banish should of, could of and would of.

The Psychology of trading: Games traders play

Trader Types and Letting emotions influence the trade.
Every trader has done it, listening to the voice of doubt or greed or impatience, trading on impulse, trading
when things outside of trading are bad. Trading in an environment that is ill prepared. Sometimes the
creation of seemingly winning routines that are only based on luck, not skill and judgement are difficult to
break. Riding a trend without knowing it is a trend, catching a down move because a Central Bank has
surprised the markets and cut rates and not knowing. Not taking a loss and seeing the market recover and
thinking this will happen every time.

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Trading and the circle of knowledge. Most traders will blow more than one account, those that preserve and
continue to lose and blow accounts have to question what lesson they dont want to learn that the market is
trying to teach them. They also have to question whether they are trading to lose and not trading to book a
profit. Sometimes we exasperate our own weakness and hang-ups, sometimes we deliberately self sabotage.
How to protect yourself? The best method is to trade small and implement rules to your trading. When you
continuously override your rules do so because they do not function, not because you cannot follow them. If
you are breaking sensible trading rules you need to ask yourself why. If those decisions lead to losses then
internally there is a conflict between making money and actually wanting to.
Take the following examples.
Trader A
Was bang on 90% of the time on both entry and exit, but after 5 years he had only 1 profitably month. 5
years is long time to dedicate yourself to something and still lose. He worked numerous separate jobs and
sunk every penny into learning his way. Every week he started up and as soon as he hit Wednesday having
hit his target, he began to think of withdrawing money from his account to prove he was on the road to
success. However by the end of the week he had given back his target and then some. By ends week he was
doubling his position size to get back to target and was thoroughly down and dismayed that yet again he had
fallen into making the same mistakes. What was worse was that he knew he was repeating them. Trader A
broke his destructive cycle only to replace it with another. Once his target was reached he stopped, phoned
his broker and withdrew it and for the whole week stopped trading. Sounds great but the start of the
following week he was still thinking about how he finally withdrew money and was at last on the road to
success. This time by Wednesday he was down considerably and had to refund his account with the money
he had withdrawn. If in the following week he had traded as small as he could, so as not to have refund his
account he could have protected himself from himself, protect himself from the part that wanted to lose.
Trader B
Substituted Forex for the lack of excitement in his life. Another dedicated trader but another loser. When you
looked at his life outside of trading there was very little going on. No relationships, no great career prospects
and he often suffered down moods and looked as Forex as his ticket out. Unfortunately he utilised the Forex
market as a stimulant and substitute for the areas of his life with little excitement and no thrill of the casino.
Subsequently he over-traded addicted to the juice of the big win addicted to the juice of a big loss. He also
had a talking point of interest, everyone assumes a Forex trader is akin to a Wall Street guru, loaded and has
life of freedom. However the Forex market was also utilised to magnify emotional problems. When he was
down, his trading was bad and getting worst and magnified everything. The longer he was in a trade the more
he was subjected to his roller-coaster emotions.
Trader C
Had learnt from childhood that he wasnt as good as his brother and sister and related this to Forex trading.
They were more academic or patient or popular. Early conditioning leaks its way like toxins through out later
life and the markets love it. Trader C always had potential, often leaving colleagues and school athletes in his
dust. He was the strongest swimmer at the start of term but fell into the middle of the pack by end. The best
writer but A grades quickly became Cs. He hit his monthly sales target only for it to be a flash in the pan.
Trader C instead of pressing forward had learnt to start to fallback, middle of the pack was where he was
supposed to be. It was safe and he became content to know he was leader of the pack for a while and
succumbed to the never mind he doesnt have his brothers dedication or will power. Subsequently trader C
often built his account up quickly and made trading look easy, but once he glimpsed a life of freedom that
Forex trading could bring, those gains evaporated and the account was blown often by revenge trading,
trying to make up the loss by over-leveraging.
Trader D
On the outside was viewed as very confident, a bit of a cold fish, nothing could faze him. Trading though
found his one weakness, that he had been to private school and learnt to bury his emotions to point of not
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caring, as weakness was bully material. Trader D believed that hard work, thinking for himself and what
will be, will reward you. With trading, when his hard work didnt show dividends he did the Chicago
OHare trade, when it went wrong he turned off. 'What will be, will be' and left it. When this started to
destroy his account he lambasted himself for being an idiot. Without knowing trading was forcing him to
learn to feel and there was internal conflict. When he lost it was every bodies fault theyre all out to get me.
Trader E
Had a PhD, trading is easy, but when trader C hypothesised and deliberated on a trade a) he had missed it b)
when he entered he was dumbfounded by the dumb market not going in the right direction. He believed his
intelligence would ultimately make the market come to its senses and his position would come right. This
often led to him pyramiding down, averaging losers or moving stops further away. If he had kept to his
original exit and stop and listened to what the price was doing, the loss would have been small and he would
realise that the market didnt care what he thought. Dont make it personal.
Trader F
Was brilliant at trading , a rule set and methodology that was A1, disciplined, never let a loss affect him,
never let a profit go to his head, yet he would self destruct and wipe his whole account out. He didnt want
the responsibility. It was damn shame as he ruined his career and sank into the abyss. This was a trader that
for twenty days straight could make 50, 60 points every day only to lose it all on the 21 st? Why? Trader F
was also a free thinker, knew his weaknesses and was passionate about the game, but sometimes without
knowing it, even when you're winning trading will intensely exhaust you, subconsciously you need to take a
break. Subconsciously he was looking out of the window on 21 st day wanting to plant trees and save the
whales. On those days the balance between making thousands and the side of an earthy life would win out
and he would trade until his account size forced himself outside. When he was outside he wasnt happily
enjoying the country side, no, he was kicking himself for blowing 20 days straight profit. Know yourself
sometimes you have to plant the trees and find the balance.
Trader G
Met a colleague who had bought a system that made a shed load on the Euro. Trader G wanted to make shed
loads too and bought into this system and was next in line for the Forex Safari. 6 months later, 2 credit cards
maxed and an ill afforded loan trader G quits. Every system he bought didnt work as they were based on
lagging indicators, some because he just couldnt follow and wait patiently for the signal. How could he wait
when the price was already tanking? Trader G wanted the reward without the work. Trader G listened to
everybody who said they knew something. Honestly if trading was as easy as painting, why do only 2 or 3 in
every hundred Traders become successful? Trader G still though has Forex trader on his CV.
Trader H
Believed in the principles of fair play and was an honest person. He didnt question price freezes on his
trading platform, didnt question suddenly been logged out of his account when he had positions on. Didnt
question continual re-quotes, didnt question why this happened when he was trying to get out of position for
a profit or loss. By this time he had lost his temper shouted at everybody including the cat. When his phone
call was eventually answered he was now faced with no profit or a bigger loss and either quit the position in
anger or doubled up in hope. Trader H quit the game; there was no level playing field here. Even when he
closed his account he had to continually hassle to get back the few hundred dollars left of thousands he had
had lost.
Watch your broker, spread betting company like a hawk , when you get a price freeze but the price on a
secondary website is still working, when your told it's your connection but it clearly isnt, when it goes to
phone trading but the phones are too busy for you to get through, when you get a margin call only to see the
price never hit where they said it did on the exchange, dont just question, demand an explanation. Why did
you stop me out? The price never hit that point. What do you mean you manually trigger orders? I could not
trade or exit my position as your platform was down and your lines were busy. Demand, demand, demand an
explanation. Vote with feet and money. Remember good brokers make money on commission; they dont
operate a dealing desk and arent trading against you. Find them, dont expect to get first class fills and exits
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every time, this is the Forex safari and taking your money is the name of the game. They depend on you
making the same mistakes a million have made before.
Trader J Gamblers Ill discipline
Turned his computer on saw the price and jumped in ill prepared, not knowing what was moving the price,
sometimes it's good to trade on gut with experience, mostly its not. Other times trader J got disillusioned that
after 12 hours of disciplined staring at a flat price, when he leaves and come back after a shower, the move
he was so patiently waiting for has happened, desperate not to miss the party he jumps in. 12 hours of
disciplined staring compromised .Tick price goes in the other direction. 3 hours later Trader J cant take the
pain anymore and he quits nursing his losing position and gets out. During a troubled nights sleep he checks
the price and is destroyed to see he quit 3 points before the very bottom of a sharp pullback and that 30 point
loss is now a profit and has hit target.
Second guess at your peril stick to your plan, there is always another trade.
Trader K
Could never accept taking a loss, he was a winner. He breathed every tick and whipsaw and was so desperate
to avoid the loss he would often quit a position to only re-enter seconds later when it ticked back up. He
would repeatedly do this until five or six small losses added up to 1 hefty loss. If he had taken the 1 position
and let the price either limit or stop, it would have cheaper all round. Sometimes you need to remember there
is no right or wrong there is no winning or losing its purely + or - profit. You have to accept you will lose,
accepting will make you focus very hard on making sure that the percentage of your profitable trades has to
be high. Looking at every tick is fine but when you dont see the forest i.e. the bigger trend of it being bought
on dips, it becomes a sweaty business.
Trader L
Didnt understand the rules. Early in his career he had got lucky with swings in his favour, he carried this bad
habit throughout his trading. He found it impossible to quit a losing position because so may times the price
had come back. Like a rabbit caught in headlights he married the position and repeatedly got margin calls.
Eventually he had to stop because he had lost all his money simply believing that was how to trade. Know
your stop, targets before you enter.
Trader M
Couldnt take a profit, he thought about it, was thinking another 3 points makes up for Tues or another 3
points and target reached, another 3 points and I can pay the gas bill. All I need is another 3 points.
Subsequently when the price reversed, he hoped for it to rebound, if he had had a sound target and rule set he
would have known what to do.
Trader N
Believed in systematic trading and looked at every indicator under the sun. He had a system that consisted of
16 indicators and was exceptionally proud of being able to understand and explain what each did. Throw in
enough price data from different markets and overtime trader N was a guru. Each Holy Grail system
consisted though, of indicators that corresponded and concurred with each other, mainly with what he
thought. Over time all those indicators and data still didnt produce the goods. Why? The unexpected can and
will happen 2) human nature. A lot of stint is given to technical analysis by those who ignore the
fundamentals and vice and versus. Keep an eye on what is happening, for every trader who doesnt believe in
Santa Claus there are hundreds of traders who do. Keeping trading as simple as you can is a major lesson.
Its complicated if you make it. Indicators tend to exasperate the noise of the market instead of helping you
hear the melody. When all your indicators are up but Goldman's have just circulated a sell report to their
clients that you wont hear about for 2 days, your longs are screwed .When all those indicators are pointing
down but all the Santa Claus boys are watching the same bullish fib signal your going to get screwed. When
a CB is quietly selling only the big boys will know. Let the price and market inform you dont be totally
blinded by what you hope or believe is true.
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Successful Traders
All of us are a million different variations of the traders above. Successful traders have developed habits that
limit the damage of there own weakness, they deal in probabilities, do not second guess the trade and enter
by their own set of rules and stick by them. Successful trader Z does not change the rules once he is in a
position > his probability is for the price to reach target A. If it doesnt he accepts this, as he knows not every
trade will be profitable. When target A is hit, he takes half the position off the table and moves his stop to
above break even. He now sees if the price will attempt target B. Yes he has a target B, C and D. If B is
reached he moves his stop to target A. However when target A is nearly reached but falls shy, trader Z moves
half the position to slightly above break even. He does not know if it will continue to fall back, equally he
does not know if it will continue. Simplicity is the key.
If his stop is hit and the price rebounds trader Z is tempted to re-enter but doesnt for his success relies on
adhering to rules, not over trading and adhering to his probabilities. He has been a culmination of all our A to
N traders. He has a solid trading plan and is disciplined enough to follow it thus, protecting himself from
himself.
Trader X has 3 indicators, when they turn up he goes in the direction of the trade, when they reverse he quits
the position. He does not trade when there are major releases, he has an excel sheet of which releases, events
and speakers move the market on average the most. He has painstakingly created this by hand over many
years and every Sunday marks on his trading calendar green hours for trading next week, red hours for when
he sits it out. He keeps a diary of every trade and thought that goes on his head. He is a success, he has
system that works for his personality and is profitable.
Not having a trading plan is a major cause of traders not succeeding. Sit down and write one. Often the fear
of success is greater than the fear of losing. Think of trading as an odds based game, the long shots dont win
often, you must look and back the evens or odds on trade.
In the current environment it is all too easy to use that redundancy money and get lured into the Forex safari.
Dont approach this like anything you have ever approached before. Think very hard, believing you can
make it, is different from making it. You wouldnt ask a gardener how to fix the brakes on your car, yet time
after time Forex followers are doing exactly that by tailgating the chat room guru or investing in a system
thats nothing more than a bunch of mas crossing.

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