Unrealistic Expectations

You know what one of the biggest factors preventing new traders from achieving success is? Unrealistic expectations. I’m not really sure if this is due to modern practices in childhood where every kid is given a trophy just for showing up, and perhaps sent by mail even if they don’t. Or shady Forex Education companies that promote themselves by offering trading perfection. Or perhaps something else beyond my comprehension. But whatever the cause, and I talk to many traders, new and experienced, I’ve noticed a pattern.

Traders seem to think that they can achieve very unrealistic win ratios. Some even claim to be achieving them. 90% win rates. One clueless soul even told me once that he hasn’t had a losing trade in years. I nodded along and assumed he hadn’t traded in years. I try not to waste my time arguing nonsense. Some of the largest and most successful hedge funds in the world have had losing years and steep drawdowns. TradingĀ  success is based on odds, partly, and sound equity management in copious amounts. I’ve had months where my win ratio is barely 30%, and I’ve still made money that month. It’s a matter of limiting your losses and never limiting your winners. If the few winners make more pips collectively than the losing trades lose, than at the end, you are profitable.

I’ve also had bad days, bad weeks, and bad months. Haven’t had a bad year yet, but I am sure it will come one day. Perfection in trading is an unrealistic expectation. A needless one, too, since as I explained above, profits in trading do not depend on always being right. They depend on being right sometimes, and taking full advantage of those times. And we teach this. Our students’ success is proof enough.

Unfortunately, we see other companies offering perfection, or the nearest thing, or worse, systems that promise to make money for you without you having to do any of that tedious stuff, like having an equity management system, a trading plan, or working on your psychology. After a while, of course, these “traders” stop trading, because they never achieve the promised perfection, and of course, the systems that promised to make money for them with no effort involved, simply fail.

It’s definitely sexier to think that you can become perfect at trading, especially if it requires no effort on your part. Similar to all those pills that come out constantly promising to make you lose weight without dieting, and without exercise. Well, as a great author once said and popularized, “There ain’t no such thing as a free lunch!” That was Robert A. Heinlein, a man I am sure would have taken to Forex Trading like a fish takes to water. He had the right attitude and a deep understanding of how the world works.

Trading, however, requires a lot of effort, a lot of study, and a lot of work. I refuse to cater to the unrealistic expectations’ crowd, which serves as a nice filter so we only get students that have the right attitude. Not that we turn people away, they turn themselves away by going after that perfect, effortless system offered by the other guys. Some wise up before they’ve lost too much and seek us out. But even then it’s an uphill battle. Breaking old habits and unrealistic expectations is very difficult. The subconscious can be our best friend, or our most fearsome enemy.

When taking up the fine sport of mountain climbing, one doesn’t choose Everest as the first outing. In fact, very few choose Everest at all, ever, no matter how experienced and well trained, and of those few who do, a good number end up losing life or limb during the attempt. If I taught mountain climbing and told people that they can, in fact, ascend to Everest’s summit, and on top of that, with zero training, I’d probably attract a decent following. People will believe anything these days. But I can guarantee that none of my students would ever be planting a flag at the top, much less coming back to tell about it. Nothing worth doing can be done without effort, and often sweat and tears, too.

Trading isn’t difficult. It’s not complicated. It can be learned. But it does take work to learn and master. And it will take work every day to trade successfully. There are no shortcuts. No free lunches. Do the work, reap the rewards. But only if you’re in the right place. If you’re at Effortless Everest Climbing School, then there’s no help for you. Sorry to put it so bluntly, but the truth needs to be said. Don’t fall for those pitches. I’ve not seen one trader saying they achieved success with any of those “perfection” trading schools, except the obvious shills they use to promote their wares. “Ultimate” courses, magic indicators (usually freely available indicators renamed and marketed deftly), expensive charting software (when MetaTrader is free and as powerful, if not more so), the shady marketing never ends.

So don’t believe the hype. Even supposing someone one day does invent the perfect system, it would become the most closely guarded secret in the world, more closely guarded than the formula for Coca-Cola. No one is that nice. But if you want to learn how to trade for real, with realistic expectations, our doors are always open. Just reach out. Climbing gear not included.

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Founder and Director of Special FX Academy, Andres is now a full time trader, mentor, and writer. In the past, Andres has held director level positions at venerable trading exchanges including New York Stock Exchange, Euronext, and Fannie Mae. Buy his Forex Trading book here!

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