By Rob Colville on March 24, 2014 in
Here’s the jackpot question:
Do you want your Forex trading to be a business?
Do you want to treat it like a day at the horse races or the casino?
Take a minute to get clear, because this question separates the successful Forex trader from the amateur full of wishes and dreams, but with an empty trading account.
Have you fallen for the trading myth that successful traders win more than 80% of the time? That line is just that – a myth or the PR copy from a Forex scammer web site. Don’t feel badly if you’ve already been snared by that dangling carrot. You’re in really good company.
Professional Forex traders treat their trading like a business – a forex business – every day, day in and day out. They have the same kinds of criteria a successful entrepreneur has for setting strategy and making decisions.
I can hear you asking the question: Lazy Trader, if successful traders only win 40% to 60% of the time, how do I make my Forex trading business profitable?
To say this just a little differently – The key is to make the profit from the winning trades larger than the losses from the losing trades.
This is also known as risk reward or risk management. If we shoot for a risk reward ratio of 1:2 on every trade we take, we only need to be right 35% to 40% of the time AND we still make a healthy profit. You honor your trading criteria. If the 1:2 risk reward ratio isn’t there – you don’t take the trade!
This may sound a little simplistic. Let me assure you that I’ve had thousands of conversations with would-be Forex traders. This understanding that Forex trading is a business is a scarily accurate predictor of who will be successful and who won’t, of who will get sucked into the emotional quicksand of trading, and who will stay clear and objective.
The Lazy Trader magic is in the consistency of applying the model, the same rules day in and day out. You simply apply your risk reward ratio of 1:2 on each potential trade.
Clearly, there is more to tell about having successful Forex trading business than I can cover in the few pages of this brief article. I never sugar coat or gloss over the hard work of being a successful Forex trader.
What I am confident of is that the profitable trader sees the Forex trading business in a very specific way.
As you look at your current Forex trader stance, how do you rate against the checklists in this article?
How consistently are you standing by your risk reward ratio if 1:2?
If I analyzed your Forex trading approach, would I see a forex business or a gambler hoping random chance operates in your behavior?
How much longer do you want to have your trading be an annoying, frustrating and expensive hobby?
Ready to turn it into a profitable forex business? Click here