People ask me this all the time. They want to know what I would do if I could start my trading career all over again.
It’s another way of asking the following question:
If I am just starting out, what do I need to know?
Now, as you know, I don’t think you should listen to anyone talk about trading unless you can see that they trade with real money. They might be losing money, but at least you can know that up front.
Jason posts his account performance on MyFxBook here:
Jason’s a real trader, trading with his own money, with real life experiences. He’s not here to sell you anything. He just wants to share his experience.
Enter Jason …
Hi, I’m Jason.
11 years ago I went to a motivational seminar where I learned about the opportunity to trade stocks. Shortly after that my friend and I spent $25,000 to take a series of classes to learn how to trade.
There were our first two mistakes. One was a little more obvious than the other; namely, I would never spend that much money to learn how to trade again. I promise you, regardless of how good the sales pitch is, it is not worth the money. I made some friends with good traders, some of whom I am still in contact today. But it was not worth what we spent.
More money does not always equate to better education – sometimes it equates to more money.
There is a lot of free trading education on the Internet. With a bit of personal motivation and time, we can learn a lot and never spend a dime.
3 ½ years after I spent all that money on the expensive education, I had no success.
3 ½ years later I believed all the myths that every other unsuccessful trader believes. 3 ½ years later I determined it was time to take a break. My life was starting to get off track. I only thought about trading and could barely connect with anybody on a normal level. I found myself teaching people all the awesome things I knew about the market, even if they didn’t want to know.
And somehow it made me feel that I was far more successful than I was. So I decided to stop trading.
The Phone Call that Changed Me Forever
Then one of my trading mentors heard that I was going to stop for a while. He called me immediately.
During the conversation he said something that ultimately changed my trading life forever. Although it was not in the way I would have expected.
”Jason, if you want to take a break, that is fine. But you need to pick it back up again. You rank in the top 5% of technical analysts I know,” he said.
You better believe that I felt very good and it made me emotional for a few days afterward.
I still stopped my trading. And 3 years later when I decided to start trading again I saw that comment from a different perspective. I may have been in the top 5% of technical analysts he knew, but what did that matter if I wasn’t making money?
Two other questions filled my mind:
- How was it that I could be in the top 5% of analysts but in the bottom 1% of profitable traders?
- How was it that I could be so smart but not able to make any money?
A New Goal
I made a conscious decision to forget anything that did not lead me to making money. That became my singular goal. Making Money.
No longer did I trade to look good, smart, or feel smart. Increasing my account size was the only thing that mattered.
(Please do me a favor and read the last 4 sentences again. And then again. Consider for a moment what your real reason for trading is and be honest with yourself. It will be one of the best trading experiences you ever have.)
My Big Mistake
I had taken too many classes about too many things. One could argue that I got a very well rounded education, but a well rounded education does not lead to money.
In those two years of education I learned Basic Technical Analysis, Advanced Technical Analysis, Basic and Advanced Fundamental Analysis, Stocks, Options (Vanilla and complex spreads), Futures, Commodities, Single Stock Futures, Forex, Automated and Discretionary trading strategies, inside understanding of several brokerage firms, Trading Psychology, and more.
I had 48 weeks of one-on-one coaching over the phone, I flew all over the United States for various classes, and I sat with 4 different traders for a total of 12 days to watch how they trade. I gained a lot of trading knowledge and experience, yet I never had positive equity in any of my accounts. People told me that if I wanted to succeed then I needed to apply myself. You can see, I applied myself, but in all the wrong places. I assumed that knowledge was power, but it isn’t.
Knowledge is knowledge and the acquisition of more knowledge only leads to the acquisition of more knowledge.
So, What Would I Do Differently?
If I were to do it all over again, what would I choose to learn? To put it simply:
I would choose to learn as little as possible – just enough to know my way around the charts.
The streamlined approach that I would take is:
Support and Resistance
- Horizontal Support and Resistance
- Simple Trendlines
- Bill Williams Fractal Pivots
This is actually an indicator, but it is based on support and resistance. I find it to be a very good learning tool
- Bar Charts or
- Candlestick Charts
There are hundreds of candle patterns that try to predict the direction of the market. Forget most of that. Just get the basic ideas of what candlestick charting is.
There are dozens of charting types. Some of them are pretty to look at – but most are a distraction from making money.
- Bill Williams Fractal Pivots (already mentioned above, but since it is technically an indicator, I have put it here as well.)
- Relative Strength Index (RSI) (Created by J. Welles Wilder)
- Stochastics (Created by Dr. George Lane)
- MACD (Created by Gerald Appel)
- Bollinger Bands (created by John Bollinger) / Keltner Channel (Created by Chester W. Keltner)
- Knoxville Divergence (created by: Rob Booker)
There are so many to choose from but these are some basic indicators that many people use. There isn’t much of a need to learn anything else. In general, it is not necessary to learn how to calculate them. It is important to know what they are attempting to show you. (I do think it is important to know how to calculate the Pivot Fractals)
General Forex Information
- Bid/Ask Spread
- Major Currency Pairs
- Commodity Pairs
- Exotic Pairs
- Swap / Interest Rate Differential
- Market Order
- Limit Order
- Stop Order
- Pips & Pip Values
Charting and Trading Platform
- TradingView (Free version will suffice for almost any need)
- Metatrader 4 and/or Metatrader 5 (both are free)
Remember that free usually fits within most peoples’ budgets. So go for free when possible.
At this point, learn 2 trading strategies. Learn their rules very well. Then manually backtest them. By manually I mean do not ask somebody to program the strategy for you and then you run an automated backtest. I mean, get out your pen and a piece of paper, or a spreadsheet software, get out your chart and go bar by bar. Look at every single bar on the chart and see if that is a buy/sell signal or an exit signal. Write down the results of every trade over a few years.
This single exercise will be you applying yourself in the right direction. You will learn more from this exercise than you ever will in a classroom. Do this on several currency pairs (or stocks, futures, etc). Do it on several time frames and over several years also. It will be one of the best experiences you ever do. I spent hundreds of hours flying around America attending classes. Later I spent hundreds of hours doing this exercise. I wish I had only done the latter.
What I have written here is exactly the way I wish I had approached my trading education.
If I were to do it again, I would do it in exactly the way mentioned above. I make a promise to any reader that following this path and applying oneself to it, will bring more experience and understanding in the market than others ever will have. It will also make you a better trader. There is more to learn. That will always be the case. I will write another article about something else I would have done differently. Before that, though, this the biggest piece of experience that I can offer to anyone who wants to trade.
Jason is a currency trader, father, and husband. You can send him an email here if you want to keep in touch.