There are tons of so-called trading gurus out there promising people the world at the touch of a button. They are lying to you. We can automate huge parts of your trading, with indicators and algorithms to more accurately predict trends, and to even ping your smartphone when a candle peaks or plummets to meet an optimal condition for you to trade, but what no one can yet do with any long-term, realistic accuracy is create technology to trade for you. TAs v. ‘Bots: A Common Misconception A Trading Assistant (TA) is just that. It is designed to assist you in best knowing when and how to place or exit trades. But a trading robot is another thing entirely. Earlier this year, a big story broke about how one fund was using actual Artificial Intelligence (AI) to trade. Of course, it’s reported as a huge technological breakthrough, and I know some professional traders who developed their own versions and met with some success. Here’s what I know. Even if you create a fully functional, practically Skynet capable learning machine, it cannot accurately predict everything. Heck, even humans going blind on charts 24 hours a day can’t do that, but a ‘bot can only sort previously recorded data and make deductive decisions based on that previous input. What it cannot do is IMAGINE. Let me tell you a story. It’s kind of famous inside the trading world, so you may have heard it before. A well-known Forex trader developed a robot that he thoroughly and completely back-tested, and verified its results over months of testing. After he was satisfied that it could meet or beat human traders, he released it to the world for purchase, and to prove its mettle, he put up a live feed on his site to show the ‘bot in action. The results were impressive. Consistent and sometimes huge wins, minimal losses, and fantastic risk management. People were raving, and I would be too, except for what happened next… The now-famous creator of the robot went on a trip. He was gone precisely six days.. And his robot ate his account in a series of horrendous trades. Seriously, he went from unprecedented gains to almost wiped out (in that one account) and doing damage control. The popular live feed went dark and never came back. Why? Was he managing these trades behind the scenes, backing up his ‘bot with human adjustments? Or, did the ‘bot get a bad piece of data or a bug that took it down? We will never know. But either way, it convinced me, and plenty of other traders, that the trading world was not ready for AI in an unmanaged setting. TAs on the other hand are programmable to your preset take profit and stop loss levels, and send you alerts so that you make the decision about whether to trade or not. I find TAs to be particularly helpful in a situation where you could choose to trail a stop loss because you don’t have to keep eyes on your charts for hours or days and you can potentially pick up lots of extra pips this way. But what about ETFs? ETFs (exchange traded funds) have become a stock portfolio staple. But they are misleading because while the fund manager does rely on algorithms to make predictive trading decisions, he also manages those decisions. He watches trends, checks the performance, and basically backs up the automation with human reasoning. There’s been some talk lately about an apparent robot that’s been taking the options market to the cleaners this spring, but no one, and I mean no one, has actual proof that it is a robot at all! They are just assuming based on anecdotal evidence of seeming speed that it has to be electronic. However, as is pointed out in Slate, the biggest hub-bub over it turned out to be a human trader who’d placed his order 19 seconds before the market-driving story broke! See? The power of human imagination and instinct, when well-educated, just cannot be beat! Imagination doesn’t mean dreaming up pie in the sky scenarios here. What I mean is humans have an ability that no robot can match—the ability to consider outcomes beyond preset parameters—to “think outside the box.” It’s the kind of thinking that led to the real-life success of Dr. Michael Burry, the genius behind Scion Capital who made billions because he identified the housing market bubble before anyone, or anything, else did. If you haven’t seen the film The Big Short, a real-life drama based in part on Dr. Burry’s discovery, you really need to! It is a mind-bending testament to how the markets turn in large part on institutional assumptions. Those of us who have the imagination to trade on those assumptions can seriously make out! So the next time someone tells you that a machine will trade for you instead of help you to trade better, for now at least, be very skeptical.

Hi traders, welcome to my new blog, it’s great to have you over and to say thank you, I’ve got a special gift for you. This won’t cost you a dime and there are no hoops to jump through. CLICK HERE TO DOWNLOAD Forex Master Control FREE It’s called the Forex Master Control and it is a premium-level system that I could easily have sold for $500 to $1,000. I made a video on the download page explaining exactly why I’m just giving this system (and the custom indicators) away free so check it out here: CLICK HERE TO DOWNLOAD Forex Master Control FREE The Forex Master Control is a simple yet powerful system that you can put into practice immediately. Not only does this secret report reveal everything you need to know about this hidden code, the indicator supplied with the report does everything you need in order to trade profitably. You can have all of this today as a FREE GIFT from me, so you can experience first-hand how powerful my methods are at making trading easy. CLICK HERE TO DOWNLOAD Forex Master Control FREE Download everything then please come back here and leave a comment to let me know what you think of it.

Are 30% a month returns really “doable” in Forex? This is a question I get a lot, especially in light of the fact that a standard S&P 500 “traditional” investment yields around 7% annually. A picture is worth a thousand words, right? So, here’s my answer to that question, that I recorded a few months ago for some of my students.    

Often, the time it takes to become a hugely successful trader seems like it’s too much. Learning to trade and applying what you learn to generating a respectable monthly return will only take you 5 years, maybe less. The first few years are very slow and can be quite frustrating. This will pass as you become more proficient and more consistent. Too many new traders-to-be want to become hugely successful as Forex traders, but they do a lot of the wrong things. Too much time is wasted on futile endeavors, too much money is lost in live accounts that are being traded prematurely. These are normal to do in the beginning, but continuing on with these novice mistakes is like spinning your wheels in the mud. New traders take so much of their valuable time looking for the Holy Grail. I think that some time should be devoted to this quest initially, but only in the sense that you prove to yourself that is doesn’t exist. Once you have realized that, and you will at some point realize it, it’s then time to focus on the core principles that build a trader into a success. Perhaps you have been in this game for the last 5 years already and there is a strong likelihood that you are not much further ahead than when you started. If this is the case, what will the next 5 years look like for you? Are you going to decide to get focused and learn the fundamentals? You need to learn the basics, about money management, about preserving capital, about letting your winners run, about taking your losses as they happen, about patience. You need to learn about greed, about fear, about hesitation and how to conquer these things. I want you to promise me that over the next 2 years you will focus less on hocus-pocus and more on trading. Learn about a trading system you are comfortable with. I don’t care if it’s mine or not, just learn a good system and stick to it. Learn the ins and outs of your system. Become familiar with the win to loss ratio, the risk to reward ratios, become intimately familiar with everything about your trading system. This will give you the courage and confidence to trade through the bad stretches as you will know that they are temporary as it has been proven to you. The following 3 years will include the final tweaking of your emotional hang-ups and some consistent gains. At the end of year 5 you should be on the verge of your Forex dreams come true if they haven’t already happened. Best regards Russ

I did not write this article, but I like it so much that I have to post it on the My First Pips blog. These 5 phases are true and if you have been trading for a while you will identify with these phases. If you are new to trading, these phases will give you an idea of what’s ahead. Step One: Unconscious Incompetence. This is the first step you take when starting to look into trading. You know that it’s a good way of making money because you’ve heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy – after all, how hard can it be? Price either moves up or down – what’s the big secret to that then – let’s get cracking! Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven’t got the first clue about what you’re trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again… and again, and again. You may have initial success, and that’s even worse – because it tells your brain that this really is simple and you start to risk more money. You try to turn around your losses by doubling up every time you trade. Sometimes you’ll get away with it but more often than not you will come away scathed and bruised You are totally oblivious to your incompetence at trading. This step can last for a week or two of trading but the market is usually swift and you move onto the next stage. Step Two – Conscious Incompetence. Step two is where you realize that there is more work involved in trading and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader – you don’t have the skills or the insight to turn a regular profit. You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine and begin your search for the holy grail. During this time you will be a system nomad – you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. Every time you come upon a new indicator you’ll be ecstatic that this is the one that will make all the difference. You will test out automated systems on Metatrader, you’ll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your ‘magic system’ starts today. You’ll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you’ll find yourself chasing losing trades and even adding to them because you are so sure you are right. You’ll get on forums and live chat rooms and see other traders making pips and you want to know why it’s not you – you’ll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You’ll then reach the point where you think all the ones who are calling pips after pips are liars – they can’t be making that amount because you’ve studied and you don’t make that, you know as much as they do and they must be lying. But they’re in there day after day and their account just grows whilst yours falls. You will be like a teenager – the traders that make money will freely give you advice but you’re stubborn and think that you know best – you take no notice and overtrade your account even though everyone says you are mad to – but you know better. You’ll consider following the calls that others make but even then it won’t work so you try paying for signals from someone else – they don’t work for you either. You might even approach a ‘guru’ or someone on a chat board who promises to make you into a trader (usually for a fee of course). Whether the guru is good or not you won’t win because there is no replacement for screen time and you still think you know best. This step can last ages and ages – in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year and more nearer 3 years. This is also the step when you are most likely to give up through sheer frustration. Around 60% of new traders die out in the first 3 months – they give up and this is good – think about it – if trading was easy we would all be millionaires. Another 20% keep going for a year and then in desperation take risks guaranteed to blow their account which of course it does. What may surprise you is that of the remaining 20% all of them will last around 3 years – and they will think they are safe in the water – but even at 3 years only a further 5-10% will continue and go on to actually make money consistently. By the way – they are real figures, not just some I’ve picked out of my head – so when you get to 3 years in the game don’t think it’s plain sailing from there. I’ve had many people argue with me about these timescales – funny enough none of them have been trading for more than 3 years – if you think you know better then ask on a board for someone who’s been trading 5 years and ask them how long it takes to become fully 100% proficient. Sure I guess there will be exceptions to the rule – but I haven’t met any yet. Eventually you do begin to come out of this phase. You’ve probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times but now it’s in your blood One day – in a split second moment you will enter stage 3. Step 3 – The Eureka Moment. Towards the end of stage two you begin to realize that it’s not the system that is making the difference. You realize that it’s actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right. You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment. The eureka moment causes a new connection to be made in your brain. You suddenly realize that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 minutes. Because of this revelation you stop taking any notice of what anyone thinks – what this news item will do, and what that event will do to the markets. You become an individual with your own method of trading You start to work just one system that you mold to your own way of trading, you’re starting to get happy and you define your risk threshold. You start to take every trade that your ‘edge’ shows has a good probability of winning with. When the trade turns bad you don’t get angry because you know in your head that as you couldn’t possibly predict it, it isn’t your fault – as soon as you realize that the trade is bad you close it. The next trade or the one after it or the one after that will have higher odds of success because you know your system works. You stop looking at trading results from a trade-to-trade perspective and start to look at weekly figures knowing that one bad trade does not make a poor system. You have realized in an instant that the trading game is about one thing – consistency of your ‘edge’ and your discipline to take all the trades no matter what as you know the probabilities stack in your favour. You learn about proper money management and leverage – risk of account etc – and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile. You weren’t ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market. Step 4 – Conscious Competence. You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you’re on a loser you close it swiftly with little pain to your account You are now at a point where you break even most of the time – day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips – generally you are breaking even and not losing money. You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently. You’ll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you’ve given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on. This lasts about 6 months Step Five – Unconscious Competence. Now we’re cooking – just like driving a car, every day you get in your seat and trade – you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 200 pips in a day doesn’t make you any more excited that getting 1 pips. You see the newbie’s in the forum shouting ‘go dollar go’ as if they are urging on a horse to win in the grand national and you see yourself – but many years ago now. This is trading utopia – you have mastered your emotions and you are now a trader with a rapidly growing account. You’re a star in the trading chat room and people listen to what you say. You recognize yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they’re teenagers – some of them will get to where you are – some will do it fast and others will be slower – literally dozens and dozens will never get past stage two, but a few will. Trading is no longer exciting – in fact it’s probably boring you to bits – like everything in life when you get good at it or do it for your job – it gets boring – you’re doing your job and that’s that. Finally you grow out of the chat rooms and find a few choice people who you converse with about the markets without being influenced at all. All the time, you are honing your methods to extract the maximum profit from the market without increasing risk. Your method of trading doesn’t change – it just gets better – you now have what women call ‘intuition’ You can now say with your head held high “I’m a currency trader” but to be honest you don’t even bother telling anyone – it’s a job like any other. . . . I hope you’ve enjoyed reading this journey into a traders mind and that hopefully you’ve identified with some points in here. Remember that only 5% will actually make it – but the reason for that isn’t ability, its staying power and the ability to change your perceptions and paradigms as new information comes available. The losers are those who wanted to ‘get rich quick’ but approached the market and within 6 months put on a pair of blinders so they couldn’t see the obvious – a kind of “this is the way I see it and that’s that” scenario – refusing to assimilate new information that changes that perception. I’m happy to tell you that the reason I started trading was because of the “get rich quick” mindset. Just that now I see it as “get rich slow.”’ If you’re thinking about giving up I have one piece of advice for you…. Ask yourself the question “how many years would you go to college if you knew for a fact that there was a million dollars a year job at the end of it? —————- I don’t know who wrote this article, but it is well written and right on the money. Thanks to the author. Best regards Russ

You’ve decided that you want to trade Forex. Why? This may sound like a weird question, but the answer to this can literally make or break you. It’s the “why” that can make you successful. Of course you are trading to make money, but depending on what that money is for can make all the difference. If you want to become a successful, superstar trader, it’s time to decide what the final goal of your trading is. Here are some examples of why other successful traders are trading. 1. To fund a retirement account 2. To earn enough to go on a vacation of a lifetime 3. To make enough to send their kids to college 4. To pay off the house 5. To pay off the credit cards and get out of debt 6. To pay the mortgage month after month 7. To make “mad money”. Extra cash to spend on niceties or trinkets 8. To pay for Mom and Dad’s retirement home costs 9. To quit the 9 to 5 job and live without the rat race 10. To elevate their quality of life 11. To provide better quality things for their kids 12. To move to a safer neighborhood Having this kind of goal in mind every time you trade will help you in all kinds of ways. The mistakes you are making today will go away tomorrow once you have a strong defined reason to trade successfully. You will no longer be willing to take trades that are not in line with your system, your risk will be limited and you won’t be reckless. No longer will you want to trade every mediocre signal, you will wait to take the highest probability trades and you will profit greatly from it. Having a strong “why” can and will improve your trading 100% instantly. Once you find that reason that drives you to trade well, you will be unstoppable! Every hugely successful trader has this reason, and that reason varies from trader to trader. It can be something as simple as making money for your retirement, or it can be something more obscure that only you can fathom. You might need a day or more to come up with a suitable “why” that will drive you forward. Once you have discovered it, post a reminder of it near your trading terminal. Make sure it’s something you can see when you go to place a trade. It has to strike a chord with you every time you see it. This reminder can be an image you found on the internet or something as simple as a sticky note with bold letters on it. Trading just for money works for a few people but not for most, emotions get in the way every time and the end result is less than desirable. Collecting a large account is too generic of a reason. There is no driving factor and no good reason that your mind can latch onto to make it work. If your mind is not in the game, neither is your brain. If your mind, your brain, your ego and your beliefs are all in agreement, you can accomplish truly amazing things! Best regards Russ

Just like there are orders that get you into a trade, there are orders that can get you out of a trade. There are 2 kinds of exit orders, they are: 1. Stop Loss order 2. Take Profit order Each of these orders will take you out when you are in a position, and each are something you can change as you are in the trade. Stop Loss order: This is an order that goes behind you in the market. That is to say if you are buying, going up, the Stop Loss order (SL) will be placed under your current position. If you are selling and want the price to go down, your Stop Loss order will go over your position. A Stop Loss will be placed initially in a losing position in order to limit your losses. Once you have decided where you will enter the market you will also determine how much you will risk losing. Your Stop Loss in this case will close the trade once the market has moved against you in the amount you have determined. For example, you have taken a long position at 1.5000 and you have decided to risk 50 pips. Your stop Loss will then be placed at 1.4950. This kind of Stop Loss is referred to as your Initial Stop Loss. What comes next is the moving of your Stop Loss towards your entry level from the negative zone. As soon as you can you want to mover you Stop Loss to the same price as your entry price. If you have entered the market at 1.5000 and the market has moved a ways in your favour, you want to move your Stop Loss to 1.5000. At this point now if the trade moves against you and you get stopped out, you will have lost nothing. You won’t have gained anything but you won’t have lost anything either. Once price has continued on in your favour, you can start to move your stop into profit that is past your entry point to secure, or “lock in” some profit. How you decide to move your stop is up to you and the system you will be using to trade. Many brokers offer the option to use a Trailing Stop. This is a stop loss that follows your trade by so many pips. You can decide to want to follow your trade by 30 pips, so as your trade moves ahead it will essentially drag your stop loss behind it as it were attached to a 30 pip length of rope. If the price reverses, the stop will not move, it will maintain that position until it either gets hit by the price and stops you out or it get pulled along by a forward moving price once again. Your Stop Loss can be one of the most powerful tools you can have in creating Forex wealth if you use it in these manners. Take Profit order: Your Take Profit order (TP) is placed in front of your trade. Your open trade will move towards your Take Profit level. You use this kind of order when you have a predefined level to exit at. For example, you have entered a long trade at 1.5000 and you want to make 100 pips on the trade, you would place your Take Profit at 1.5100. Once the market tags your TP level it will automatically close the trade and bank your profits. Both Stop Loss and Take Profit orders can be placed as you are placing your entry order, or they can be placed after you have already entered a trade. Both orders are something you can alter at any time. If you change your mind at any time you can remove or change your SL and TP orders. There is another way to exit your trades, and that is to simply close the trade you are in. It’s not an “order” so it wasn’t described above, but it will get you out of a trade. You can close a trade if you are in profit and it will bank your earnings. Or, you can close a trade when you are losing and it will finalize the loss. Closing a trade is an instant execution, it will close your trade as soon as you can click the button. Best regards Russ

One of the biggest attractions to the Forex markets is the leverage FX brokers are able to provide. Traders are leaving Stocks and Futures to trade Forex because the leverage is so attractive. So what is leverage? Leverage is a magnifier. It takes the money you want to put up to trade and magnifies its value. Trading currencies means you are buying and selling with the expectation that the exchange rate changes in your favour. These changes are 100ths of a cent so they don’t amount to much, but with the power of leverage you can make a small change magnify into a larger change. Right now in the US, brokers are able to offer you leverage of 50:1 What this means is your buying power is magnified 50 times. If you want to trade $1000 worth of currency (1 micro lot), you only need to trade with $20 of your own money (margin). This $1000 of currency equates to roughly 10 cents per pip of movement. With the power of leverage you can really make a trade worth something. Outside of the US, brokers are able to offer you up to 500:1 leverage!! This means to control the same $1000, all you need is $2! They call it “lending” or “borrowing” from your broker, but there isn’t any money that really gets borrowed or lent. Beware! Leverage works great when a trade goes your way, but it’s equally as powerful when the market moves against you. If you can gain 10 cents a pip, you can lose 10 cents a pip. The more you read about Forex, you will find many sites call leverage a “ Double Edged Sword” and this really is the case. Leverage is what can make trading currencies so profitable, but please, use its power wisely! Best regards Russ

Have you noticed that when you see a currency pair, it is always in the same order? I mean the base currency is always the base currency and the quote currency is always the quote currency for that pair, never switched around. Also, you may have noticed that the USD is not always the base currency either. Sometimes it is, but other times it’s the quote currency. Each currency is abbreviated with a 3 letter code as established by the International Organization for Standardization (the ISO). The ISO 4217 code list is the established norm in banking and business all over the world for defining different currencies. The rules for putting together a currency pair come from the established priority each currency pair is given. The higher the priority a currency has in a pair, that currency becomes the base while the other currency is the quote. Historically, the different currencies were ranked according to their relative values to one another. This is no longer the case, but the ranks have been established and so they remain. In 1999 the Euro was born, and out of sheer determination, they are ranked with the highest priority. The priorities, or ranks, are as follows: Euro Zone Euro (EUR) Great British Pound (GBP) Australian Dollar (AUD) New Zealand Dollar (NZD) United States Dollar (USD) Canadian Dollar (CAD) Swiss Franc (CHF) Japanese Yen (JPY) When making a pair, whichever is higher on the above list becomes the base currency. For example, you may want to trade the Canadian Dollar against the Great Britain Pound. Since the Pound is higher on the list, it becomes the Base currency and the Cad becomes the quote currency. You will end up with the GBP/CAD. Best regards Russ

Now that you have considers trading the Forex markets, it might be a good idea to know what it is you are trading. The word Forex is short for Foreign Exchange. Known as the Forex market, FX, and Currency markets, what you are trading is the exchange rate between 2 currencies. Let’s look at an example of this. Let’s say you are traveling from the US to Canada. While at the airport you decide to change your 100 US dollars to Canadian dollars. In return for your US dollars you receive 100 Canadian dollars (this conveniently occurred when the two currencies are even). You tour Canada and finally it’s time to go back to the US. You forgot that you had the 100 Cad in your pocket as your Canadian host was generous enough to pay your way. While at the airport you exchange your 100 Canadian dollars back to Us dollars, but because the exchange rate has changed while you were away, you now get 101 US dollars back. You made $1 by selling one currency (US dollars) and buying another (CAD dollars), holding on to it as the exchange rate changed, and then buying back your US dollars. You’re a currency trader and didn’t even know it! Buying and selling currencies and waiting for the exchange rates to change between the two is how we make money in the Forex markets. The amount of change is small, we wait for 100ths of a cent change, but this is enough to make big money in the markets. We use leverage to magnify these small changes and we use chart analysis (generally) to determine when to buy or sell. These market changes happen every second. There is always movement in the markets and there is always an opportunity to make money. We can choose from a list of currencies we want to compare, we call these “Currency Pairs”. We can trade the US Dollar against the Great Britain Pound, we would then be trading the USD/GBP. We will get into the details of this in a future post, but for know you have a very good idea what the Forex markets are all about. Best regards Russ

Hello there, I would like to take just a minute to congratulate you on your choice to learn more about trading Forex. The Forex markets are a wild and wonderful place to be, and if you are new to it, it can be also be very frustrating. I hope to help smooth out the bumpy road that lies ahead of you. If you have some experience with trading the Forex markets, you might find these few initial blog posts to be old news to you, but if you are new to trading, these posts will help to familiarize you with the markets. Whatever the reason is that brings you here, you are about to begin a fabulous journey. The Forex markets can be a source of income for many, and for some, it’s a source of incredible riches. I would like for this blog to help get you turn trading into a source of income, and with a little extra work, become a source of incredible riches. There is no reason that trading Forex can’t be how you get “rich”, but it won’t be an easy road to travel. This is a road fraught with frustrations and an occasional sense of “what the hell am I doing here”. If you are willing to but in a little work and a little time, together we will turn you into a successful Forex trader. My goal through this blog is to teach you everything you need to know about trading Forex. You will what to do and what not to do. You will learn how to read the charts and how to take profitable trades. You will learn about money management and how to handle your losses. This is an exciting time, I wish you the best of successes! Best Regards Russ