I believe that Trading Forex is a great business with unlimited income potential, minimal overheads and a substantial amount of time and geographic freedom.
To look at going into business as a Forex trader I recommend starting by looking at business in general.
Many people have the dream of going into their own business, this dream often turns to a nightmare as more than of 80% of new businesses fail within the first two years.
It is said that around 90% of people who begin trading are not only unsuccessful but lose all the money they started with.
However, the people that invest in a franchise have an 80% success rate.
So what is the difference between starting up a business on your own and buying a franchise?
Most people starting a business on their own have an idea of what they want to do but only a general concept and vague plans of how they are going to do it.
On the other hand, when people purchase a franchise they invest in specific methods, detailed plans and the training that makes it all work.
The franchisee has a detailed plan. He is not experimenting, testing, changing the method in the hope of getting it right. He has specific processes and has learned the steps that must be taken to produce the desired result, making money.
If you asked any McDonald’s owner if their investment in the McDonald’s system was worthwhile, what do you think they would tell you?
The way in which most people start a general or trading business is very similar.
There seems to be three main approaches that people take when starting in the business of trading, so let’s look at the time and investment required for each of these to reach some level of success.
- The first approach is to “Give it a go” and see if it works. I will call them “The Gambler” for many people that start trading it is no different than if they were to go to a casino, roll a dice, pick a number and hope for the best. Casinos make billions of dollars annually on the backs of people who take this approach to making money.
Trading with this approach is almost guaranteed to end in loss and failure.
- The next and probably most frequent approach is to scour the Internet downloading ebooks, reading articles, watching videos, attending webinars and finding any resources that are available for free.
Let’s call this one “The Seeker”. While this approach is a little more enlightened than that of The Gambler it often has a similar result.
The problem here is that there are many different and almost totally opposing methods of trading Forex and this usually leads to confusion, and confusion usually leads to losses. A few losses and the Seeker gets out on the Internet again looking for the next best thing and so on and so on and so on. This is both exhausting, demoralising and potentially a very expensive way to learn.
Another approach that really doesn’t warrant discussion here is to use Forex robots. This is not really a method, this is for “The Dreamer”, and the only person likely to become wealthy with this is the marketer. There is a place for certain types of automated systems in trading but they have no relationship to the dozens of hyped up robots that are hitting the market every week. If you would like to learn a little more about the proper place of robots in trading you will find an article on that in the Trading Post section of this website.
Pardon the little detour.
- The last approach I’ll call “The Earner”. I call this last approach the earner for two reasons. Firstly this person realises that to do anything successfully you have to learn the right way of doing it. In other words by putting in the work they can reasonably expect to EARN the right to the rewards that this effort brings. The second reason is the obvious one; this is the most direct path to consistently earning well trading Forex.
If you want to be successful, then model successful behaviour. This is why franchises are successful and this is why a person wishing to become a successful trader is most likely to succeed if they have a mentor with a good successful system to model.
So what is the likely time to becoming successful and the cost of these various approaches?
- “The Gambler” - Time needed: perhaps years. The cost: possibly everything.
- “The Seeker” – Time needed: again unknown but this person at least has the chance of discovering a satisfactory system or even better, learning that they need assistance and finding a mentor.
The cost: usually many thousands of dollars.
- “The Earner” – Time needed, weeks or months. The cost: both known to begin with and a small fraction of the cost of either the Gambler or the Seeker.
Before closing I have a few questions I would like to ask you, or perhaps that you should ask yourself.
1. Are you serious about wanting to trade Forex successfully or merely curious?
2. Do you think that your present experiences and knowledge can help you succeed with either of the first two methods when they account for most of the 90% failure rate of would be Forex traders?
3. If you do not have the resources to pay for an education that will give you the best opportunity of becoming successful then can you really afford to take the other inevitable paths to failure?
I am sorry if this sounds harsh. However, having seen so much heartbreak and money lost I believe it is best to save your money until you can afford to start your trading business the right way. Learn as much as possible but don’t even open a demo account. It is sometimes harder to undo the bad habits of an unsuccessful trader than it is to teach a complete novice how to trade successfully.
However, if you are able to start you trading business the right way and become part of the 10% of traders who are making an exceptional living from Forex then we would be happy to welcome you to work with us in generating that success.