a portion of his savings and moved it into his active trading account. He felt a bit nervous trading with real money rather than just making trial trades. This uneasy feeling heightened when he quickly found out that the system that he had developed during his period of successful paper trading didn't seem to work as well with “real” money.
When he was making paper trades, he never hesitated to enter into a trade when he felt it looked right. Most of the time, he made successful trades. The win/loss ratio in his paper trading had been consistently above 75 percent. But after a few losses from real trades, he found himself losing confidence in the system he had set up from paper trading. He tried to make adjustments as he continued, but his win/loss ratio fell through the floor. Days went by with no net profits and Fred began to panic. Despite this, he traded every day, because as a day trader he needed to do this in hopes that his small profitable trades could accumulate over time.
Even more discouraging, Fred found himself glued to his computer as much as he used to be at his engineering job. He wasn't used to feeling like a loser. But Fred had to admit that it wasn't fun anymore. He once again felt trapped in a routine that sucked joy out of his life.
But he wasn't ready to give up. Not yet. He was determined to make his trading a success.
The Path Forward
Fred believed that he was an intelligent person who could do well in any intellectual activity. Never in his wildest dreams did he realize how challenging stock trading could be, and how difficult it is to earn a living by trading full time. Because there seemed to be a distance between where he was and where he wanted to be, Fred decided to seek more training, to learn more techniques, and pick up more advanced systems to bridge the gap.
He asked himself:
How will I get the know-how to succeed?
What's the secret to making it big?
Can I create my own winning strategy?
Fred jumped from one website to another looking for advice, spent money and time on trading courses, and subscribed to expensive software. Would this improve his situation? He was hopeful.
The Struggle of a Young Family
Stacey Braverman and her husband, Brad, had always wanted a family. They began to put a plan together to adjust their lifestyle to welcome a baby, and at the same time make ends meet. They agreed that Stacey should stay at home to take care of the baby for at least the first three years. They wanted to make sure the baby got the full care and attention from his parents, was taught well, and grew up to be happy and healthy.
But this decision meant that a major sacrifice had to be made.
Stacey would have to give up her high-paying job as a sales representative. For years, she had been one of her company's top producers, generating remarkable profits for the company and earning huge paychecks. Her sales commissions contributed the major part of her family's income.
It was beyond Brad's capability to shoulder the family's finances alone. They needed an extra income source. The only option was for Stacey to work part-time to supplement his income.
A Perfect Plan Found?
After careful consideration, they found a plan to address both concerns: Stacey would learn to become a forex trader. They knew they wanted something that allowed Stacey the freedom to work from home, on her own time, and they had heard about the high potential returns of forex trading. At the same time, they were fully aware of the high risks, so they had put aside a cushion of cash to weather the loss if things did not turn out well. Stacey knew she had a knack for business, mathematics, and logical analysis, and could easily imagine how she could use all these in trading. Forex trading seemed to be the perfect fit.
Stacey planned to dedicate most of her time at home to take care of the baby and trade for three hours every day. This way, she could plan her working hours around her life and the parenting plan, and have the luxury of a flexible schedule.
During her pregnancy, she started training herself in trading, received coaching from an experienced forex mentor, and tested her skills with a demo trading account. Within a couple months, she had established a trading system that fit her personality and preference, and so she took the leap of faith and started trading with hard cash.
Seven months later, their baby, Brad Jr., arrived. Soon after her maternity leave was over, Stacey quit her job and, according to their plan, started to trade forex at home while enjoying her new role as a mother. What astounded her was the fact that over time, she actually found herself making more money trading at home for three hours a day than when she worked a full-time job!
She was overjoyed, but cautious at the same time. She learned from her training that “each trade is a new trade,” and she held no illusions that there are any guarantees of success in trading. She understood that trading was much more than making a best guess on where a currency pair movement was heading, but rather, a deliberate study of the market fundamentals, cycles, and price action and skillful application of the trader's psychology. She was cautious, all of the time.
A Typical Afternoon of a Trader
One day, as Stacey was feeding Brad Jr. and watching Bloomberg Financial News, she glanced over at her laptop computer. She noticed that her last trade was stopped out for a slight loss. She opened up her trading journal and clicked on a worksheet where she tracked her trades. She took a screenshot of the well-documented chart and pasted it on the worksheet, and then analyzed the trade.
Stacey posted the losing trade and the $120 loss into another spreadsheet called “the P&L and Win/Loss Ratio.” She looked at the running P&L column and then at the Win/Loss column. This told her that she was holding around her 68 percent trade wins and her profits were slightly behind this month's goal.
After putting Brad Jr. down for his nap, she went over the trade again to examine in detail what had happened. From previous experience, she learned that she was guilty of not being patient enough to wait for confirmation before entering a position. She was not upset about this, because she knew that all she had to do was to remind herself more often to execute her trades with patience.
At the end of her day, after reviewing her trading activities, she logged on to her trading coach's website and entered the chat room. She posted the screenshot of the chart of her losing trade and asked her fellow traders: “Do you think this was a viable trade according to this setup?” She got up and went about some of her household chores and periodically checked to see if there was any response to her question. As expected, she received the valuable feedback she was looking for.
Stacey paid a sizable fee for the guidance from a veteran coach, and used his website to network with fellow traders, exchange ideas and tips with them, and receive support and motivation when she needed it. She knew the hefty sum that she had been paying for all this was a sensible investment.
Trader by Chance
From the start, Fred had entered into stock trading by a chance encounter with his ex-colleague at the local health club. It was the wonderful outlook of the life of a day trader that lured him into the day-trading sphere. No detailed forethoughts and contingency plan were made before he made the leap:
● He did not plan his trading education.
● He was blinded by the potential rewards of a successful trading career but did not consider the risks.
● His decision to trade was reactive (to his job loss) and not aligned with his skills
