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Forex Gambling Mentality Kills Profits

Every forex trader understands that we need to use basic forex money management to be successful at forex trading online.

This mentality caused a winning series of trades (60% success) to lose 700% of a forex trading account that should have gained 520%. Read this post to see how a profitable forex trader can still lose so much money, and how you can prevent this from happening to you.

Confession: This trader was me a few years ago when I got started trading forex online. I’d be willing to bet something like this has happened to you…

Why is Money Management important?

It prevents what I call the “Forex Gambling Mentality,” when you see how this can turn online forex trading PROFITS into LOSSES, hopefully you’ll beat this dangerous way of thinking forever.

What is the Forex Gambling Mentality?

When you follow impulsive decisions to determine the amount of risk you take on a forex trade, you are falling into the Forex Gambling Mentality. Anything outside of a predetermined money management strategy is considered a forex gambling mentality.

Let’s look at an example:

• You enter trade #1 and risk 10 pips to make 10 pips. The trade succeeds and you make 10 pips!
• You enter trade #2 and risk 10 pips to make 10 pips. The trade succeeds and you’re now up 20 pips!
• You are felling good, so on trade #3 you risk 20 pips to make 20 pips.  The trade succeeds and you’re now up 40 pips!

At this point you’re feeling like you’ve mastered forex trading. You get out your calculator and start figuring out that at this rate of compounding your forex trading profits you’ll have $2.5 million in your online forex trading account in about 9 weeks (TRUST ME – I’ve actually thought this way, and you probably have to).

You are now cocky and you start trading again, since you’re on a roll you decide to trade more lots to make more money faster.

• You enter trade #4 and risk 40 pips to make 40 pips. The trade fails and now you are at breakeven!

You’ve still been successful 3 out of your last 4 trades, so you do another trade:

• You enter trade #5 and risk 40 pips to make 40 pips. The trade fails and now you are down 40 pips!

Now you get nervous and decide to be more conservative, so you go back to what was successful for you in the past:

• You enter trade #6 and risk 10 pips to make 10 pips. The trade succeeds and you’re only down 30 pips!
• You enter trade #7 and risk 10 pips to make 10 pips. The trade fails and you’re down 40 pips!
• You enter trade #8 and risk 10 pips to make 10 pips. The trade succeeds and you’re only down 30 pips!

You now look at your past 8 trades. You think to yourself  “I’ve been right 5 out of 8 times, or 62.5% of the time.  I’ve been allowing my emotions to control me. I need to stick to my plan. If I just risk 20 pips to make 20 pips, I’ll be successful.”

So you do the following:

• You enter trade #9 and risk 20 pips to make 20 pips. The trade succeeds and you’re only down 10 pips!
• You enter trade #10 and risk 20 pips to make 20 pips. The trade fails and you’re down 30 pips!
• You enter trade #11 and risk 20 pips to make 20 pips. The trade fails and you’re now down 50 pips!

You’re down 50 pips, so you look at what you’ve been doing to try to analyze patterns and stop making the same mistakes. You’re not too worried yet, so you notice the following. You’ve still been right 6/11 times. You also notice that you’ve never had three failing trades in a row. Since you just had two failed trades, now’s your turn to put the odds in your favor. So you decide to go for breakeven and risk 50 pips to make your money back:

• You enter trade #12 and risk 50 pips to make 50 pips. The trade fails and you’re now down 100 pips!

Now you feel like you’re having bad luck and aren’t going to risk any more money wildly. You’re still in the game and you know you can still make money with trading forex online, so you go back to risking 10 pips and the following happens:

• You enter trade #13 and risk 10 pips to make 10 pips. The trade succeeds and you’re only down 90 pips!
• You enter trade #14 and risk 10 pips to make 10 pips . The trade succeeds and you’re only down 80 pips!
• You enter trade #15 and risk 10 pips to make 10 pips . The trade succeeds and you’re only down 70 pips!

STOP! END OF EXAMPLE

It doesn’t seem right that a forex trader who is profitable 9 out of 15 times (60% of the time) could lose so much money trading forex online. This is the same reason that compulsive gamblers lose money, they don’t follow basic forex money management of trading only 2% of their account per trade. By doing this the forex trader gets to be more profitable. This is what forex losers do.

A forex winner who is free of the forex gambling mentality would have had the following experience (with the same trades):

• You enter trade #1 and risk 10 pips to make 10 pips. The trade succeeds and you make 10 pips!
• You enter trade #2 and risk 10 pips to make 10 pips. The trade succeeds and you’re now up 20 pips!

You notice that your account size has grown & you can now safely risk 12 pips to make 12 pips.

• You enter trade #3 you risk 12 pips to make 12 pips.  The trade succeeds and you’re now up 32 pips!
• You enter trade #4 you risk 12 pips to make 12 pips.  The trade fails and you’re still up 20 pips!
• You enter trade #5 you risk 12 pips to make 12 pips.  The trade fails and you’re still up 8 pips!

You notice that your account size has shrunk & you can now only safely risk 10 pips to make 10 pips.

• You enter trade #6 and risk 10 pips to make 10 pips. The trade succeeds and you’re up 18 pips!
• You enter trade #7 and risk 10 pips to make 10 pips. The trade fails and you’re still up 8 pips!
• You enter trade #8 and risk 10 pips to make 10 pips. The trade succeeds and you’re up 28 pips!

You notice that your account size has grown & you can now safely risk 12 pips to make 12 pips.

• You enter trade #9 and risk 12 pips to make 12 pips. The trade succeeds and you’re up 40 pips!
• You enter trade #10 and risk 12 pips to make 12 pips. The trade fails and you’re still up 28 pips!
• You enter trade #11 and risk 12 pips to make 12 pips. The trade fails and you’re still up 16 pips!

You notice that your account size has shrunk & you can now only safely risk 10 pips to make 10 pips.

• You enter trade #12 and risk 10 pips to make 10 pips. The trade fails and you’re still up 6 pips!
• You enter trade #13 and risk 10 pips to make 10 pips. The trade succeeds and you’re up 18 pips!
• You enter trade #13 and risk 10 pips to make 10 pips. The trade succeeds and you’re up 28 pips!

You notice that your account size has grown & you can now safely risk 12 pips to make 12 pips.

• You enter trade #14 and risk 12 pips to make 12 pips. The trade succeeds and you’re up 40 pips!
• You enter trade #15 and risk 12 pips to make 12 pips. The trade succeeds and you’re up 52 pips!

You notice that your account size has grown & you can now safely risk 14 pips to make 14 pips.

Would you rather be up 52 pips, or down 70 pips?

This is the difference between the Forex Gambling Mentality and Basic Forex Money Management.

Posted in Money Management

Rapid Forex Scam Watch Gets Your Money Back

When Rapid Forex relaunched as a blog, I got several emails that I haven’t had a way to deal with…

Until Now!

Many of the rapid forex blog readers have been telling me that there are hundreds of forex scams out there. To help expose these online forex trading scams, I’ve created a new blog feature, The Rapid Forex Scam Watch.

From this point forward, I’ll be monitoring the Internet for reports of fake forex trading courses, fradulent forex investment schemes, and just down right forex rip-offs.

I’ve seen some of these forex trading scams circulating online, but now I’m going to help to prevent you & others from being burned.

4 Benefits of Blogging About Online Forex Trading Scams:

1. Pressure will be put on the forex scam to refund money to victims.
2. The forex scammer will be forced out of business.
3. Forex traders will be warned to avoid the forex scammer.
4. Traders who have been scammed will have a place to report their grievances.

Of course I’ll also be sharing the very best resources with you on the rapid forex blog as well.

Rapid Forex Scam Watch Begins With You

I’ve already found a few Forex scams, which I’ll be reporting in the new Rapid Forex Scam Watch section of this blog. But rather than just picking an anonymous scam out of thin air (there are many), I wanted it to be more personal.

Here’s what I need you to do:

1. Report any forex trading website that’s scammed you out of money.
2. Explain how they scammed you (i.e. why you think they are a scam).
3. Post your grievance as a comment to this blog post.

I’m going to take the top scams reported by Rapid Forex blog readers and then do some more research and discover the truth about the scam. I’m going to put pressure on the scammers by creating blog posts explaining how they’re scamming people, and share people’s stories who they have scammed. I’ll find more people that they’ve scammed.

I’m going to contact them and ask them to give you a refund. If they issue refunds and you confirm it, I’ll post that on the blog as well. I think it’s only fair to allow the “scammer” to try and make things right and clear their name. If they refund everyone’s money, I’ll post that too.

If you’ve been burnt, you might never see that money again. I think it’s worth a try. Rapid Forex holds enough weight in the online forex trading world that I’m confident that I could help many of you get your money back.

To try and get your money back and warn other forex traders about malicious forex trading scams, please post your “I was scammed” experience as a comment below:

Posted in Forex Trading Scams

Forex Sailing – Part Time Online Forex Trading

Earlier this week I announced the re-release of the Rapid Forex Supreme Trader Package as an updated 2010 multimedia edition, which listed a DOZEN online forex seminars (webinars) that will be released on the rapid forex blog in the weeks to come. If you’re already a rapid forex blog subscriber, you’ll get these for free in your email inbox.

Rapid Forex Priority Subscribers are being updated more frequently, and are more involved in the re-release of the Supreme Trader Package.

Forex Sailing – Part Time Forex Trading

Forex Sailing was actually the final course that was added to the Rapid Forex Supreme Trader Package originally. The original focus was on daytrading the forex market. The starting point has now shifted to focusing on how to do online forex trading part time, working 10-20 minutes (30 absolute MAX) per day.

Forex Sailing is basically the opposite of Forex Scalping (a course that will be taught fairly soon at Rapid Forex in the free online forex seminars being held as part of the Supreme Re-Release).

Forex Sailing allows you to place trades that last several days, sometimes even a few weeks (although not the main focus of Forex Sailing). This allows the forex trader to trade the Forex in a relaxed way.

Forex Sailing would fit the term “forex swing trading” in that the time frames are similar.  Forex Sailing is essentially a Forex Swing Trading Course, but it is different than traditional swing trading, and should be more fun than traditional swing trading.

Why Start Slower?

Many people are attracted to the fast paced forex day trading arena. Others want to go lightning speed and scalp the forex market. This is not only possible, I’m even going to teach you how (later).

The majority of Rapid Forex Blog subscribers are 25-39 years old, went to college, are married and have kids. Most of us want the freedom to not have to sit in front of a computer 24 hours a day. Forex Sailing is for the part time forex trader that wants to enjoy Forex trading at a leisurely pace, continue to learn, and make some profits.

Crawl Before You Walk – Walk Before You Run

Forex Sailing will show you how to hedge your bank account so you don’t lose money through inflation due to the steadily declining dollar. Forex Sailing will show you how to use forex as investing, not just trading. Forex Sailing will have you in the forex market without being afraid to go to the bathroom and “miss something important.”

Forex Sailing Release Date

When will Forex Sailing be released as a free online forex seminar (webinar)?

I’m still recording Forex Sailing. The original book was 215 pages, I’m trimming it down to the shortest video possible so you can learn fast & easy. I expect to have it done within the next few days. If it’s not ready by April 1st, 2010 – I’ll post an update on the rapid forex blog, and notify the priority subscribers.  If it’s not totally finished this week, it should be ready next week.

Is Forex Sailing Really Going to be FREE?

Yes! If you’re subscribed to the rapid forex free 20 part eCourse, you’ll receive access 100% for free. No tricks, no marketing gimmicks.

What About the 90 Day Boot Camp?

When I announced the re-release of the Supreme Trader Package, I also mentioned an idea about an ONLINE FOREX Training Program. I got about 40 comments telling me that this was a great idea, so I’ve decided to do it. I’m still working out the details on this for now. I expect to launch this in mid-late April 2010. I’ll let you know more about this once Forex Sailing has been released.

You Feedback is Appreciated

Right Now I’m committing to tons of work to make this an amazing forex website for you for FREE. I love to hear your comments and input. Leave a comment and let me know what you like about what I’m planning, what you think could be better, what you need, and what you don’t like (be gentle) Post a Comment Here.

Posted in News