Episode 13’s question wasn’t even a question, and may or may not have had anything to do with Forex trading psychology.
But if your question is vague, I reserve the right to turn it into whatever I want.
And the question is…
“Tell me 3 things every Forex trader must have”
— Mo from Izmir, Turkey
What I’m hoping Mo meant to ask was “What are 3 character traits every professional Forex trader must have?”
We all want to be pros one day, right? This is an important question, a very important one actually.
Trading Psychology Might Just Be #1
This is the way I have always laid out the 3 main aspects of Forex trading, in order of importance:
- Money Management
- Trading Psychology
- Trade Entries
If you wanted to argue the order should go like this:
- Trade entries
- Bollinger Bands
You would be an idiot. But if you thought the original order should instead be:
- Trading Psychology
- Money Management
- Trade Entries
I would have no strong case against you. You may very well be right.
Reason being, if your trade psychology is anything less than tip-top, you are going to create mistakes that should have never been there.
These mistakes create needless losses and big wins that you should have been a part of, but weren’t.
And the impact this has on your bottom line can be extraordinary.
So who is this turkey telling me how to act and behave as a trader?
I have no education in terms of psychology or anything like that. On paper, I’m not “qualified” to give advice on such a topic.
All I can do is what I’ve done since day one — talk about my mistakes in hopes that you won’t make them yourself.
Every Forex tool I’ve told you to avoid has been one I’ve used myself.
Every money management fuck-up I tell you to avoid is one that affected me at some point in the past.
And I can damn well assure you every psychological and emotional pratfall I tell you to avoid has happened to me at least once.
I have also had to make the transition from fake money to real money, and then again from real money to other people’s money. The emotional transition was not an easy one for me either time.
But I figured it out quickly. I had no other choice.
What I really DON’T want is for you to have all the tools you’ll ever need to crush this market on a consistent bases only to allow your emotions to screw yourself out of winning.
It’s bound to happen to you anyway, but I want to do whatever I can to make it happen as seldom as possible.
Trait One – Initiative
I talk about myself here on the blog and in the videos to qualify myself and to make anecdotal points to better illustrate what I have to say.
In real life, I don’t like talking about myself a whole lot.
This being the case, I will still get into conversations with old co-workers, local bartenders, and other random people I meet, and the age-old question is “What do you do?”
I tell them I’m a Forex trader, and they instantly want to know more.
Often at times, they take it further and say they want to learn how.
Then you already know what I do. I tell them to go to the place I told you to go in Episode 2, then when they’re done, get back to me.
I’ve probably told this to 50 people in my day. Any guesses to how many of them got back to me?
And he later became a private client of mine. (This isn’t something I do anymore BTW, please do not ask)
My point here is, even people who are genuinely interested in what we do as traders, the people who see me with this time-rich lifestyle and would love nothing more than to get out of their awful jobs and someday have that life themselves…..
…..still can’t be bothered to spend 2-3 days on a free online course!!
They lack even the basic, remedial levels of initiative. Their paths are pretty much cemented in whatever their level currently is. That level may drop, but it aint ever going up.
What’s even worse is sometimes they’ll even say “No, I want you to teach me how to trade”. I can’t think of a shittier use of my time than to sit with these people and “show them Forex” like it’s no different than showing somebody how to fly a kite.
This is most people in the world. The simple fact you took the time to read this blog puts you light years ahead of these people.
Now this doesn’t mean that you’re nothing more than a content consumer. Because you still might be.
So many people love listening to podcasts and watching videos on things they’ll never do. I don’t know if it’s my aggressive approach to life, or the fact that the older I get the more I value my time and can’t understand why anyone would squander theirs this way but…
Seriously. WTF are you doing?
My success here when it’s all said and done will be measured by how many traders I can turn into bullet-proof killers in this market.
And I can’t do that for you if you won’t….even….get….off….the…..ground.
If this is you, please make this the last sentence you ever read of mine, and politely leave, for good.
On top of everything else, Forex trading allows you to demo trade with fake money before you ever invest one red cent into your future!
And you STILL haven’t done anything to get started? I do not get it.
I was serious earlier, leave. I have zero time for you. Go watch NetFlix.
Trait Two – Discipline
This one obviously one of the three, but it often goes deeper than I think a lot of people realize.
Lacking discipline really boils down to one of two things:
- Being lazy
- Allowing emotions to dictate what you do
Not a whole lot I can do on the first one. If you think you are somebody who lacks discipline overall and has the tendency to get lazy at the wrong time, there’s not a whole lot I can say to you.
But Jocko can. Very seldom do books have an impact on the way I think these days, but wow, for $15 I got a reality slap right in my face when I read “Discipline Equals Freedom: Field Manual” by former Navy Seal Jocko Willink.
You will feel like a lazy piece of trash, and this is a very good thing. If this book doesn’t turn things around for you nothing will. Accept your fate. And go watch NetFlix.
Lack of discipline as it relates to Forex trading can also mean deviating from a system that works, for whatever reason that is.
Unlike most traders, you at least have a framework for a system that works, and many of you are starting to put yours together. This takes discipline as well, and good on you for this.
But the real challenge lies ahead.
How well will you stick with this system? Will you lose faith in it after taking a few losses in a row?
Will you have a big win and take your profit to early because you don’t want your new account total to go down after it just went way up?
Will you take a quick 30 pip loss and panic?
All of these things fall under deviating from a system, which is what disciplined traders don’t do. You can read this blog and say it to yourself over and over again, it’s still going to happen.
My only hope is that simply having the awareness of this will be enough for you to figure out that biting the bullet and sticking to a system no matter what will always be the best long-term solution.
And speaking of long-term….
Trait Three – Patience
The opposite of patience is instant-gratification, and I cannot say enough horrible things about instant-gratification.
Most traders want it, and want it NOW. These traders are doomed.
A lot of traders who visit the No Nonsense Forex YouTube Channel are the same way. They have no interest in doing things the way we do.
This is great! There are dozens of Forex trading channels out there for them that will satisfy their needs a lot more.
And there’s NetFlix!!
What a time to be alive for the instant-gratification crowd, no?
But again, their fates are sealed, and they are none the wiser to it.
I get it too. Nobody likes their job or their situation. I was the same way when I started. And because of this, it led to a desperation that made me think “If I just find the right ‘way out’, I can get myself out of the restaurant industry for good in about two years”.
This led to a stint in sports betting, which I was actually good at and had a disciplined money management approach that made me profitable, but it wasn’t sustainable long-term and I knew it.
Then I became a penny-stock trader, and like the guy who hits his first pull on a slot machine, I 10X’ed my money on my very first penny stock. I was on my way to freedom!
I lost everything a few months after.
Then I found Forex, said to myself “This is what I want to do for the rest of my life”, saw that I could have 50:1 leverage, and saw how well support and resistance lines coupled with the RSI worked in all the examples I saw, and started planning my future lying on a beach somewhere.
Then I blew my trading account out three times.
There is no quick way to wealth and happiness. Seventeen people made a fortune in crypto. The rest absolutely ate their balls. They still hold onto hope based on a lot of truisms and hype.
It’s the exact type of thing I saw in penny stocks over and over again, just a more blown-up version of it.
Crypto turned into a bunch of small-time nobodies finally getting that big break, becoming evangelists of their new-found religion….
…..to broke again because they never once had the sense to take profit at any point in time.
Seen it all before, been there all before, and I understand the hope and the hubris behind it.
But let it be a modern day real-life lesson that there is no quick way to the top.
The great news is you have all the time you need to get there (though I’m doing my best to make that time shorter for you), and the ride there is fun as hell.
If you like stuff like this, there will be individual videos on each one of these traits, along with another one or two more secondary traits I didn’t mention.
If you don’t like stuff like this, get on board with it anyway, because you can’t afford to ignore it.
It WILL hit you in your trading career, and it’s only a matter of how hard and how often.
Here’s to a soft landing my friend.
PS: Jocko does have a great podcast too. One of the better episodes…