OVERVIEW

Hello trader, we congratulate you on getting this

valuable eBook. Before you start your journey we
want to give you quick guide on Premier Trading
Secrets course.

What to expect
This course will give you comprehensive
understanding of trading basics and most
importantly will show you what works in trading
world and what don’t. We will show you how
precise steps on how to build solid trading
foundation – what are real trading “secrets’ and
how to apply them to make trading strategy that
actually works in real life.

15 Trading Secrets that are used by professional

traders. It will explain all that you need to know
about forex trading – what works and what
doesn’t work, and what gives you winning edge
(i.e. “real” trading secret). And most importantly -
show you how to use that all in one tradable,
realistic trading system.
15 TRADING SECRETS
Secret #1: Why most of the traders are
doomed...

Anyone who starts down the road to becoming a

trader eventually comes across the statistic that
90 percent of traders fail to make money when
trading the stock market. This statistic deems that
over time 80 percent lose, 10 percent break even
and 10 percent make money consistently.

An interesting point about this statistic is that it is

not based on geographical region, age, gender or
intelligence. Everyone aspires to be in the top 10
percent who consistently make money when
trading the stock market, but few are willing to
put in the time and effort to achieve this.

When I give a presentation, I ask those present if

they want me to teach them what the 10 percent
of traders know or the other 90 percent, and every
time they say the 10 percent. To me, the answer to
understanding the 10 percent is simple - all you
need to do is look at all the books and courses
available and pretty much don't do most of it. To

01
be one of the top traders who consistently
succeed in trading, avoid making the following
ten mistakes.

1. Looking for a Holy Grail.

Traders who skip around from one method,
system, indicator or service to the next in order to
find a perfect solution with instant gratification
usually end up disappointed. If this describes you,
stop right where you are.

2. Not sticking to a plan.

A methodology, or trading system, is essential. The
markets can be chaotic and confusing, especially
for someone without a specific plan of action that
can be used again and again. Without a plan, you
will react to the market instead of anticipating the
market. Creating a trading plan is a highly
individual process and usually stems from years of
experience.

Here at Aspen, we have a methodology that allows

us to make sense of the market day after day. This
is what we share with our clients. We follow this
strict process on each and every trade we take,
and we pass those trades with the exact

02
stop/entry/exit parameters on to you.

3. Improper mindset.
Humans are emotional creatures by nature, but
being emotional in the uncertain environment of
trading can be calamitous. Almost every book on
the subject of trading psychology hammers home
the idea of more discipline and less emotion.
Emotions will inevitably come into play while you
are trading. It’s how you deal with those emotions
that will define you as a winner or a loser.

4. Improper trade size.

Capital preservation is paramount. Poor account
sizing— risking too much per trade— is a surefire
way to fail. Trading is not a sprint; it’s more like a
marathon, and a very long marathon at that. You
will lose trades here and there. It’s how you deal
with losing that matters.

At MoneyBack FX, we follow strict account sizing

rules (which we pass on to you). We tell you
exactly how much to risk per trade and exactly
where to exit—whether that exit is at one place or
multiple places. There is no guesswork for us in
trading, which is what makes us successful.

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5. Poor risk-to-reward ratio.
There are two reasons traders end up with a poor
risk-to-reward ratio: 
a. They don’t have a trading plan and instead
simply react to the market.
b. They simply can’t hold their winners… but they
hold their losers.

Having a plan gives you the confidence to see your

analysis through to the end. At Aspen, we have a
62% win/loss ratio, and our risk/reward ratio is
better than 1:2.

6. Holding on to losing trades and getting rid of

winning trades.
Here we go again: the old “but I don’t like to lose”
argument. It’s human nature to hold onto losses in
the hopes that they will rebound. You will have
losing trades; get used to that fact. Focusing on
how you manage loss—rather than trying to
ignore it—will put you ahead of the crowd.

On the flip side, traders often get out of winning

trades too early so they don’t have to deal with
“giving profits back.” If you want to lose money
trading, holding losses and getting rid of winning

04
trades is a surefire way to achieve it. In trading, it’s
much more important to be profitable than to be
right, and in order to be profitable, you need to cut
your losses early and let your winning trades keep
working for you.

7. Thinking of trading as black and white.

It might pain you to hear this, but trading is not a
black and white process; there’s a lot of gray.
Another losing analogy is the “red light/ green
light” system. Having a simple 3-step process to
help you frame and identify a trade set-up is okay,
but experienced traders know that nuance is
where real insight lives.

Some days, trading is indeed A + B = C. Other days,

trading is A + B = 1 (or D or F or Z). If trading was A
+ B = C all the time, everyone would know exactly
how to win. This is not realistic.

8. Overtrading.
This one is simple. If you’re trading simply for the
sake of trading, you’re overtrading. Trade because
you see genuine opportunities in the market.
Trading is not like a 9-to-5 job where you are
rewarded for constant productivity. You don’t get

05
paid to push buttons all day long; you get paid by
making good, winning trades. It’s that simple.
Movement in the markets doesn’t mean you must
trade. Trade when things line up for you. Be
patient, wait for setups to occur, and when they
do, take action. If you want to succeed at trading,
you need to act like a winning trader, and winning
traders are patient and wait for setups.

9. Not taking trading seriously.

I’m often puzzled by how often people approach
trading with a different attitude than they do any
other money making venture. Trading is a
business, and like most vocations, it takes time to
learn how to perform well. People go to school for
years to become doctors; but many so-called
hobbyist traders think that simply reading a few
“For Dummies” books or scanning some indicators
will suffice. This attitude toward trading is like
throwing darts at the wall with a blindfold on.
Shortcuts and scams don’t work. Trading is not
easy, and you can’t learn it without effort. You can,
however, enlist a seasoned expert (like us) to
guide you.

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10. Not having a successful mentor.
Any successful trader once had a mentor, coach or
service helps him to formulate a plan and strategy
and learn how to be successful. I am no exception
to this rule.

Yes, there is a lot of free advice available, especially

on the internet. You can spend your time sorting
through it, guess which nuggets of information
are authentic and valuable, and then hope for the
best. If you’re really an ambitious D.I.Y.-er, you
could, in theory, learn to do just about anything
with a few books and an internet connection. But
will you learn to do it well? And how long will that
take, exactly? And do you really have that kind of
time and discipline?

Working with a mentor is a powerful shortcut that

helps you tap into proven trading approaches so
you can start making money faster. When you
enlist a mentor, you are essentially buying
knowledge and training that is an investment in
your future trading. Over time, as you learn a
framework that works, you’ll eventually be able to
add your own investing twist to it. But like a
house, a solid foundation is the very first step.

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 Secret #2: Identify exactly WHAT
“Trading Secret” is, so you know exactly
how to use it!

Online trading gives you almost complete

freedom to do anything you like – you can trade all
markets at any time you want! You basically can
set any trading conditions you seem to fit! You can
trade oil, metals, forex, commodities or indices.
You can enter or exit any trade you like. And its
100% to you if you will make millions or not! In fact
– there is practically no other industry that
provides such access and freedom to make money
as online trading! But why is almost no one able to
do that?

And probably all of us at some point have

wandered – what is “Real Trading Secret” that
separates winners from losers. Is it some magical
ability to forecast markets? Is it superhuman
intelligence? Just luck? Or something else? Truth
is that the answer is much simpler and
straightforward.

The reality is that the very same fact that lures you
into trading is one of key reasons most people fail

08
in it – there are so many things you can do that it
is very easy to start to trade on anything that you
see! Any news event, any flashy indicator or tip in a
trading forum will give you the urge to trade on
your emotions! This is gambling no trading, and
gambling is not the way to make money in
trading!

If you look at any successful trader you will clearly

notice that they have a very detailed and
structured way how they trade. They have a strict,
disciplined way how they approach markets and
how they trade. In fact – if there is one distinction
between winners and losers it is their approach to
trading. Not the strategies themselves, but their
approach! They know which markets to trade and
which not to trade. They know when to trade and
when not to trade. They know when to enter and
when to exit their trades. And most importantly –
they know how to limit their losses and maximize
their profits! In fact if you boil it all down to one
criterion it’s this - you know that your profits
exceed your losses and you will make money in
the long run! Doesn’t this sound like a REAL
trading secret? If so, it is because that’s precisely
that – the only REAL trading secret is money

09
management. Forget about signals, forecasts,
entries, charts, fundamentals and any other
nonsense! If you want to make serious money in
trading then money management is the only
thing you will need to know! And you will have to
focus 90% of the time only on that! That is the
single best thing for you to improve your trading!
And if you haven’t traded before it’s even better –
you will know it from the start!

I will help you understand some of the more

important aspects of managing your risk and
capital as you trade the markets. This lesson will
answer many questions I get from traders asking
about breakeven stops, trailing stop losses, and
more. So let’s get started…

Understanding how to implement Forex trading

money management to grow your trading
account is essential to the success of all traders.
However, many beginning traders are largely
unaware of some or most of the basic concepts of
effective Forex money management, and this is a
major reason why so many traders fail to make
money over the long-term in the markets.

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This article will cover five topics that every trader
should be keenly aware of in order to grow their
trading account as efficiently as possible.  You
should use this article as a starting point to
understand Forex trading money management,
and refer back to as needed to solidify your
comprehension of each topic discussed.

How much should I risk on a trade?

I get a lot of emails from traders asking me how
much they should risk per trade, or what
percentage of their trading account they should
risk per trade. Unfortunately, there is really no
“concrete” answer to this question because there
are a lot of variables that are different from one
trader to the next. A good place to start when
trying to determine how much to risk per trade is
to honestly answer this question: how much
money do you have as disposable income that you
can realistically afford to lose?

I find that many beginning traders fund their

trading accounts with money they really shouldn’t
be risking in the markets, and if they don’t initially
make this mistake, they make later down the road
after blowing out their first account. So, first off,

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you should never risk any money in the markets
that is not truly disposable, and by truly disposable
I mean “fun money”, money you don’t need for any
other purpose besides entertainment. I am not
implying trading is entertainment, I am just trying
to convey the point that you should only trade
with money you truly do not need. Doing this will
start you on an “even” emotional playing field,
because you will have no emotional attachment to
your trading money.

Next, when determining how much you should

risk on a trade, always think in terms of money
risked, not in pips. The notion that a trader should
think in terms of pips instead of dollars is simply
not conducive to effective Forex trading money
management. Pips are basically irrelevant because
one trader could risk the same amount of pips as
another trader but they could have drastically
different money amounts at risk, this is a result of
position sizing and will be discussed below.

In my own personal approach I take a more

discretionary approach to how much I will risk on
any given trade, this is contrary to what the
popular Forex web presence might say. I typically

12
risk a set amount of risk percentage per trade,
rather than a set money, this approach works for
me because I have mastered my trading edge,
which is trend trading, and so I know exactly what
I am looking for in the markets. Also, because I
trade with purely disposable income, I have no
problem risking a set risk percentage on a trend
trading setup that I feel 100% confident in.

Risk reward
Risk reward should be thought of as the
“workhorse” of money management, the proper
implementation of risk reward is how professional
traders make money. Indeed, it is so powerful that
you can even enter the market essentially
randomly and not lose money over the long run,
and perhaps even turn a small profit, through the
proper execution of risk reward.

Unfortunately many traders take the wrong

approach to risk reward by worrying first about
the potential reward and last about the potential
risk. You need to first calculate the risk involved on
any potential trade setup AFTER you determine
the most logical place to put your stop loss. Once
you have done this, you then can determine what

13
the potential reward is based on multiples of your
dollar amount risked. So, if you risked 1 EUR on a
trade, you ideally want to aim for a reward of at
least 2 EUR or more; the R:R would be 1:2. The idea
is that if you can make at least 2 times your risk on
all your winning trades, you will, over a series of
trades, offset your losers to the point of turning a
decent profit. Obtaining a R:R of 1:2 or better even
gives you the potential to lose on the majority of
your trades and still make money. For more on the
topic of risk reward see this article: Secret 3#.

Position sizing
Many traders do not understand position sizing,
but it is a very simple concept that you must
understand if you want to effectively manage your
money. Position sizing allows you to risk the same
amount of money no matter what trading strategy
you trade or how large or small your stop loss
distance is. Some traders erroneously believe that
by having a wider stop loss on a trade they are
risking more money or that by having a smaller
stop loss on a trade they are risking less money.

The truth of the matter is that you can adjust your

position size up or down to meet the necessary

14
stop loss distance. So, you first should determine
the most logical place to put your stop on a trade
setup, you never want to determine your position
size first, this should always come AFTER you
determine the best and safest place for your stop.
After figuring out where to place your stop loss,
you THEN calculate the number of lots you can
trade to maintain your pre-determined risk
amount. This is the correct way to maintain your
risk on any trade; it is a basic but essential
component to an effective Forex money
management plan. For more on the topic of risk
reward see this article: Secret 3#.

How effective money management helps you

manage your emotions
I often discuss the importance of managing your
emotions while trading the Forex market. This is a
very important factor of successful trading, but it
is something that depends heavily on correct
Forex trading money management. Put simply, if
you don’t logically manage your money and risk
on every single trade, it will be nearly impossible
for you to manage your emotions effectively. There
is a reinforcing loop between money
management and emotion management, and it

15
can go either way. For example, the better you
manage your risk and money in the Forex market,
the easier it becomes to manage your emotions,
simply because if you are effectively managing
your money you are unlikely to become emotional.

Conversely, if you do not take risk and money

management seriously you are opening a can of
“emotional” worms that will be very hard to
contain. The temptations of over-trading and over-
leveraging your trading account are very difficult
to contain if you aren’t trading with truly
disposable income or aren’t comfortable with the
amount you are risking per trade. So, you see, you
need to build your Forex trading money
management plan on a solid foundation, and this
starts with the concepts discussed previously of
disposable income, risk / reward, and position
sizing.

Master your Forex trading strategy

Finally, in order to truly exploit all of the above
topics, you need to truly master your Forex
trading. As I discussed earlier under the “how
much should I risk on a trade?” The main reason
that I am comfortable using a somewhat

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discretionary approach to risk is because I am
100% confident in my knowledge and awareness
of my edge in the market; price action.

Experienced traders like myself know that trading

less often than most amateurs is conducive to
growing their trading account. Put simply, there is
no reason to trade if there is no reason to trade. All
of the above money management principals are
best taken advantage of when you are confident
in your trading strategy and have no doubts in
your mind about what the market should look like
before you risk your money in it. Essentially,
domination of your chosen Forex trading strategy
will tie all of the pieces of money management
together and make them work in your favor.

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 Secret #3: The TWO ways you can get
yourself light years ahead of others... so
that you can turn your trading
PROFITABLE, for FREE!

Aspiring forex traders often spend countless hours

searching for that perfect trading system which
they think will make them rich by following a
particular set of trading rules in a robotic manner.
Unfortunately, most traders fail to realize that the
real “secret” to successful forex trading lies in a
thorough understanding and implementation of
risk reward scenarios and position sizing. Forex
trading is at its very core a game of probabilities,
to become a consistently successful forex trader
you will need to view each trade setup as a
probability. When you learn to think in
probabilities you will be on the path towards
trading success, because you will be viewing the
market from an objective and mathematical
mindset instead of an emotional and illogical
mindset.

What ultimately separates winning traders from

losing traders is how they think about the market.

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Winning traders view each trade setup as just
another execution of their trading edge, they then
think about how to minimize their risk on the
trade while simultaneously maximizing their
reward. Through the power of risk to reward
scenarios and position sizing, professional traders
know how to effectively manage their risk on each
trade and as a side-effect of this knowledge they
also manage their emotions. When you begin to
view each trade setup as just another execution of
your trading edge and effectively implement
position sizing and risk to reward scenarios, you
will also be managing your emotions because you
know your possible risk and possible reward
BEFORE you enter the trade, you then set and
forget the trade and therefore there is nothing to
become emotional about.

In nutshell risk is the amount of money you are

WILLING TO LOSE if you are wrong about the
market. So his definition of risk is how much you’ll
lose per unit of your investment (i.e., share of stock
or number of futures contracts) if you are wrong
about the position that you have taken.

This is called the initial Risk or (R) for short.

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One of the key principles for both trading and
investing success is to always have an exit point
when you enter a position.  Trading without a pre-
determined exit point is like driving across town
and not stopping for red lights—you might get
away with it a few times but sooner or later
something nasty will happen.

In fact, the exit point that you have when you

enter into a position is the whole basis for
determining your risk, R, and the R-multiples (i.e.,
risk /reward ratios) of your profits and losses.

Your exit point can be either a percentage, in

points or in dollar terms. For example, William
O’Neil says that when you buy a stock, you should
get out when it loses 7-8%.  Another trader
proposes a philosophy of getting out of a stock
when it moves 1-2 points against you.

Tell me more about stops.

A stop is basically a preplanned exit.  Van says that
having stops prevents disaster even though this
strongly goes against the grain of the long-term
buy and hold philosophy.

20
When the price hits your stop point, you exit the
market.  A trailing stop, basically adjusts that stop
when the market moves in your favor, thus giving
you a profit-taking exit as well.

For example, if you buy a stock at $30, and have a

25% stop, then you would exit the trade if the price
drops 25% to $22.50.

In a trailing stop example: You buy the same stock

at $30 (with the initial stop at $22.50) but if the
stock moves up to $60, your 25% trailing stop
would also move up with it and would be placed
at 25% of $60, which is $45.

In other words, you would get out of the trade if

the stock turned and dropped to $45.00 but
because you bought it at $30, you would have
locked in half your profit or $15. The trailing stop, in
other words, moves the exit point in your favor as
the price moves in your favor. BUT you must never
move it backwards.  Thus, if your stock moves
down from $60 to $50, you would still keep your
exit at $45, 25% away from the high of $60.

In Van’s opinion, this kind of stop is a safe form of

21
buy-and-hold.  You could be in a stock for a long
time, but if something fundamental changes, it
gets you out.

As an example, JDSU went from about $12 in

February 1999 to a high of nearly $150 in 2000
(prices are adjusted for a number of share splits). 
A 25% stop would have kept you in the entire
move.  You would have been stopped out in April
of 2000 at a substantial profit.  However, if you had
used a buy and hold philosophy, the same stock
hit a low of $1.58 in October 2002.  You might
never get back to breakeven (an 800% gain from
current prices) in your lifetime, but the stop would
have totally allowed you to avoid that fall.  In
addition, it would have gotten you out of stocks
like Enron and WorldCom before any of them
became headlines.

There are many reasons for using tighter stops

and you will probably need to use them for a
variety of different trading styles.  We are simply
suggesting 25% stops as a substitute for the “buy
and hold” philosophy.

We are not going to get any further into stops at

22
this point because we want to get back to talking
about risk. Just remember, you need to know
when you are getting out of a position (your exit
point or stop) to determine your risk.

Tell me more about Risk or (R).

Risk to most people seems to be an indefinable
fear-based term. It is often equated with the
probability of losing, or others might think being
involved in futures or options is “risky.” Van’s
definition is quite different to what many people
think.

As far as Van is concerned, risk is definable.

Many people in the investment world are overly

optimistic about the trades that they make. They
don’t understand their worst case risk or even
think about such factors.

Instead, people are seduced by trading terms such

as “options” “arbitrage” and “naked puts,” Or, they
buy into the academic definitions of risk such as
volatility, which make for good theoretical articles
by academicians, but they totally ignore two of the
most significant factors in success. The golden
rules of trading...
23
Never open a position in the market without
knowing exactly where you will exit that
position.

And cut your losses short and let your profits run.

So let’s look at the first golden rule in much more

detail to be sure that you understand it.  That rule
is to always have an exit point when you enter a
position.  The purpose of that exit point is to help
you preserve your trading/investing capital.  And
that exit point defines your initial risk (1R) in a
trade.

Let’s look at some examples.

Example 1:
You buy a stock at $50 and decide to sell it if it
drops to $40.  What’s your initial risk?

The initial risk is $10 per share.  So in this case, 1R is

equal to $10.

Example 2:
You buy the same stock at $50, but decide that
you are wrong about the trade if it drops to $48. 

24
At $48 you’ll get out.  What’s your initial risk?

In the second example, your initial risk is $2 per

share, so 1R is equal to $2.

Example 3:
You want to do a foreign exchange trade, buying
the dollar against the euro.

Let’s say that one hundred dollars is equal to 77

euros.  The minimum unit you must invest is
$10,000.  You are going to sell if your investment
drops down by $1000.

What’s your risk?  What’s 1R?

We made this example sound complex, but it
isn’t.  If your minimum investment is $10,000 and
you’d sell if it dropped $1000 to $9000, then your
initial risk is $1000, and 1R is $1000.

Are you beginning to understand?  R represents

your initial risk per unit. R is simply the initial risk
per share of stock or per futures contract or per
minimum investment unit.

However, it’s not your total risk in the position

25
because you might have multiple units.

What’s my total risk?

Your total risk would be based on your position
sizing and how many shares or contracts that you
actually buy.

For example, you may buy 100 of the shares in

Example 1,  which would be 100 multiplied by the
share cost of $50 each. So your total COST would
be $5000. But you are only willing to risk $10 per
share. So $10 multiplied by 100 shares = $1000 total
risk for this position.

In example 2,  you also buy 100 shares at the $50

price for a total COST of $5000. However, in this
scenario you are going to get out if it reaches $48.
So your risk is $2 per share multiplied by the 100
shares - you are only risking $200 of your $5000
investment.

Understanding R-multiples
The next key point for you to understand is that all
of your profits and losses should be related to your
initial risk.  You want your losses to be 1R or less. 
That means if you say you’ll get out of a stock

26
when it drops $50 to $40, then you actually GET
OUT when it drops to $40.  If you get out when it
drops to $30, then your loss is much bigger than
1R.

It’s twice what you were planning to lose or a 2R

loss.  And you want to avoid that possibility at all
costs.

You want your profits to ideally be much bigger

than 1R.  For example, you buy a stock at $8 and
plan to get out if it drops to $6, so that your initial
1R loss is $2 per share.  You now make a profit of
$20 per share.  Since this is 10 times what you
were planning to risk we call it a 10R profit.

You try it:

You buy a stock at $40 with a planned exit at
$35.  You sell it at $50. What’s your profit as an
R-multiple?
You buy a stock at $60 and plan to get out if it
drops to $55.  However, when it goes that low,
you don’t sell.  Instead, you just stop looking at
it and hope it will go back up.  It doesn’t.  It
becomes part of the headline business news
involving corporate scandal and eventually the

27
stock becomes worthless.  What’s your loss as an
R-multiple?
You buy a stock at $50 and plan to sell it if it
drops to $49.  However, the stock takes off and
jumps $20 in three weeks when you sell it. 
What is your profit as an R-multiple?

Answers
1. A 1R loss is $5.  Your profit per share is $10, so
you have a 2R profit.
2. A 1R loss is $5.  Your loss per share is $60, so you
have a 12R loss.  Hopefully, you can understand
why you never want to let this happen.
3. A 1R loss is $1.  You profit per share is $20, so
you have a 20R profit.  And hopefully, you
understand why you want this to happen all
the time.

What's really interesting is that once you

understand risk and portfolio management, you
can design a trading system with almost any level
of performance. For example, you can design a
system to trade for clients that would make about
30% per year with only 10% draw downs.

On the other hand, if you want to trade your own

28
account and be a little more risky, you can design
a system that will produce a triple digit rate of
return as long as you have enough money to do so
and are willing to tolerate tremendous
drawdowns.

It’s a whole new way of thinking for some, but

most successful traders think in terms of
risk/reward, which, of course, gives them an edge
out there in the markets. Learning to trade and
invest in this way will keep you in the game longer
and enable you to run with your profits and cut
your losses short. And what could be better than
that?

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Secret #4:Find exactly HOW top traders
are consistently making money...

Traders need to have a solid and realistic

understanding of what they expect in the future,
and specifically what returns they expect to
produce in terms of profits. I ask traders all the
time what kind of returns or draw-downs they are
expecting in their account and a surprising
number say they have no idea or give me their
goals rather than planned long term returns. They
want to be profitable, but don’t understand how a
string of trades may impact overall portfolio value.
This kind of trading without planned expectations
and rules is a major barrier to success.

So what’s the problem with not knowing what to

expect?

Random Trading
Many traders have a propensity for random
trading. These kinds of traders seem to be fishing
for opportunities. They may take a trade or two
from someone else they saw on a forum or
newsletter, or they may just be entering trades
without a firm risk control procedures in place.

30
They have a tendency to “wait and see what
happens.” Usually, what happens is a gut
wrenching period of indecision, loss and
frustration.

Misunderstanding of trading costs

The second issue these traders deal with is a lack
of understanding of system or strategy costs. I
usually refer to this as “trader myopia” or “tunnel
vision.” These traders concentrate on one trade at
a time and are not thinking about tomorrow, or
next month’s trades, and don’t understand the
costs that can impact results in the long term.

In this section we will address those issues, and

walk through the process of developing accurate
expectancy for a trading strategy.

What is expectancy?
Expectancy is what it sounds like. It helps you
understand how winners, losers, gains and losses
relate to each other over the long term. This
process helps you understand what your trading
system profits should be, and helps validate your
backtesting.

31
What does that mean?
By now you should know that in the game of
trading it is much more efficient to think of the
profits and losses of your trades as a ratio of the
initial risk taken (R).
But let’s just go over it again briefly:

One of the real secrets of trading success is to

think in terms of risk-to-reward ratios every time
you take a trade.  Ask yourself, before you take a
trade, “What’s the risk on this trade?  Is the
potential reward worth the potential risk?”

So how do you determine the potential risk on a

trade?  Well, at the time you enter any trade, you
should pre-determine some point at which you’d
get out of the trade to preserve your capital.  That
exit point is the risk you have in the trade or your
expected loss.  For example, if you buy a $40 stock
and you decide to get out if that stock falls to $30,
then your risk is $10.

The risk you have in a trade is called R.  That

should be easy to remember because R is short for
risk.  R can represent either your risk per unit,
which in the example is $10 per share, or it can

32
represent your total risk.  If you bought 100 shares
of stock with a risk of $10 per share, then you
would have a total risk of $1,000.

Remember to think in terms of risk-to-reward

ratios.  If you know that your total initial risk on a
position is $1,000, then you can express all of your
profits and losses as a ratio of your initial risk.  For
example, if you make a profit of $2,000 (2 x $1000
or $20/share), then you have a 2R profit.  If you
have a profit of $10,000 (10 x $1000) then you have
a profit of 10R.

The same thing works on the loss side.  If you have

a loss of $500, then you have a 0.5R loss.  If you
have a loss of $2000, then you have a 2R loss.

But wait, you say, how could you have a 2R loss if

your total risk was $1000?  Well, perhaps you
didn’t keep your word about taking a $1000 loss
and you didn’t exit when you should have exited. 
Perhaps the market gapped down against you. 
Losses bigger than 1R happen all the time.  Your
goal as a trader (or as an investor) is to keep your
losses at 1R or less.  Warren Buffet, known to many
as the world’s most successful investor, says the

33
number one rule of investing is to not lose money. 
However, contrary to popular belief, Warren Buffet
does have losses.  Thus, a much better version of
Buffet’s number one rule would be to keep your
losses to 1R or less.

When you have a series of profits and losses

expressed as risk-reward ratios, what you really
have is what Van calls an R-multiple distribution. 
As a result, any trading system can be
characterized as being an R-multiple distribution. 
In fact, you’ll find that thinking about trading
system as R-multiple distributions really helps you
understand your system and learn what you can
expect from them in the future.

So what does all of this have to do with

expectancy?
When you have an R-multiple distribution from
your trading system, you need to get the mean of
that distribution. (The mean is the average value
of a set of numbers).  And the mean R-multiple
equals the system’s expectancy.

Expectancy gives you the average R-value that

you can expect from the system over many

34
trades.  Put another way, expectancy tells you how
much you can expect to make on the average, per
dollar risked, over a number of trades.

So when you have a distribution of trades to

analyze, you can look at the profit and loss of each
one of the trades that was executed in terms of R
(how much was profit and loss based on your
initial risk) and determine whether the system is a
profitable system.

Let’s look at an example:

35
So this “system” has an expectancy of 2R, which
means you can “expect” to make two times what
you risk over the long term using this system,
based on the data that you have available.

Please note that you can only get a good idea of

your system’s expectancy when you have a
minimum of thirty trades to analyze, and the
preference would be to have 100 to 200 trades to
really get a clear picture of the system’s
expectancy.

So in the real world of investing or trading,

expectancy tells you the net profit or loss that you
can expect over a large number of single unit
trades.  If the total amount of money in the losing
trades is greater than the total amount of money
in the winning trades, then you are a net loser and
have a negative expectancy.  If the total amount of
money in the winning trades is greater than the
total amount of money in the losing trades, then
you are a net winner and have a positive
expectancy.

Example, you could have 99 losing trades, each

costing you a dollar.  Thus, you would be down

36
$99.  However, if you had one winning trade of
$500, then you would have a net payoff of $401
($500 less $99)—despite the fact that only one of
your trades was a winner and 99% of your trades
were losers.
We’ll end our definition of expectancy here
because it is a subject that can become much
more complex.

Van Tharp has written extensively on this topic

and it is one of the core concepts that he teaches.
As you become more and more familiar with R-
Multiples, position sizing and system
development, expectancy will become much
easier to understand.

To safely master the art of trading or investing, it is

best to learn and understand all of this material.
Although it may seem complex at times, we
encourage you to persevere because like any
worthwhile endeavor, as soon as you truly grasp it
and then work towards mastering it, you will
catapult your chances of real success in the
markets.

37
Secret #5: The BEST kind of strategy on
the planet! (And the #1 way to
SAFEGUARD your trading capital against
risks of any kind!)

An outstanding way to profit from large moves in

the markets without spending a lot of time in
front of the computer is trend trading (or trend
following). Trend traders identify trends and find
low risk entry points from which they hold their
position until the trend reverses. This style works
in most asset classes and can be highly profitable
given sufficient diversification, strong risk control
and the discipline to stick to the system.

What Is A Trend?
A trend is simply a sustained price movement in
one direction. This may occur in any financial
instrument. Trends occur in stocks, futures and
forex markets. They occur in all time frames,
however, the longer the time frame, the larger and
more rewarding trends can be.

The nature and magnitude of trends varies by

asset class, however, trend following can be used

38
in stocks, futures and forex markets.

Components Of Trend Trading Strategies:

The great thing about this trading strategy is that
similar (or indeed identical) trading systems can
work across many markets. For example, one of
our trend following systems works exceptionally
well on stocks, but also works on futures and FX
with no modifications at all. This is because most
markets trend and the trading strategy is very
robust. All it requires is:
1. A way to identify when a trend is in place
2. low risk entry point
3. An initial stop loss to gets you out if you are
wrong
4. An exit rule that gets you out when the trend
changes

If your trading strategy has all of these

components, combined with good risk
management rules, you are on your way to a
profitable trend trading system! (Of course you will
need to undertake the correct trading system
development for yourself to be sure as there are
no guarantees your rules will be profitable).

39
Forex Trend Trading
A forex trend occurs when one currency
strengthens in comparison to another currency.
For example if the Australian dollar is
strengthening because Australian interest rates
are going up (making the currency more
attractive) and the US dollar is weakening because
interest rates are dropping in the US, then the
AUDUSD exchange rate would likely exhibit a
good trend.

Just as in stock and futures trend trading, a forex

trend following system can be based solely on
price movements and perform well over a long
period of time. Forex trend trading systems can
have the same mechanics as stock and futures
systems, however, the selection of currency pairs
to trade is important because of the high
correlation between many currency pairs.

Generally the best forex trends occur in the USD

exchange rates rather than the cross rates
between other currencies. Below is an excellent
example of a forex trend in the Australian dollar
exchange rate (AUDUSD) that could have been
traded using this strategy.

40
How Does Trend Trading Work?
Trend trading is simply an approach in which you
identify that a trend is in place, enter the market
in the direction of the trend and hold the position
until the trend reverses.

After entering at a low risk entry point, trend

following generally uses an initial stop loss point
which is fairly close to the entry point. Once a
trade is profitable a wide trailing stop allows
plenty of price movement before exiting a trade.
This ensures you remain in the trade for the
duration of the trend and don’t exit too early.

The wide trailing stops work because trends can

get volatile and may move against you quite a way
before rocketing off in the desired direction again.
If you use too tight a trailing stop then you will be
forced out of the trend and miss out on the
potential profit from the big move later in the
trend.

When your trend following system is right (around

30% of the time) and the trend continues, large
profits are made on the trade. When the system is
wrong (around 70% of the time) you exit quickly at

41
a small loss and moves on to the next trade.

Trend following systems make money overall,

even with this low percentage of winning trades,
because winning trades are much larger than
losing trades.

Trend Trading Can Be Emotionally Challenging

The psychological difficulty most people have is
that trend following requires you to be wrong
most of the time. This can be emotionally
challenging because most people have the
subconscious desire to be right (this comes from
our school education system which was not
designed to produce outstanding traders!!!)

Trend following is practically very simple

but can be emotionally challenging

New traders looking for reassurance that they are

doing well expect reassurance to come in the form
of winning trades – these may be infrequent with
this trading strategy. However, total profitability is
what we should really be interested in, not just
being right.

42
Can A Trend Trading Strategy Fit In With A Day
Job?
YES! Trend following is a form of trading that can
be learned and can fit in easily with whatever else
you have in your life at the moment.

Trend trading systems require very little time

each day to execute and can be run while you
still have a full time job

Once you understand the concepts and codify

them into a mechanical trading system it
becomes a matter of simply running your system
scans each day and executing to the rules.

Trend following strategies should not involve any

judgment, so assuming everything is documented
properly in your trading plan the decisions are
very quick to make on a day to day basis. Our
major forex system takes about 30 minutes a day
to execute.

What Are The Components Of A Trend Trading

Strategy?
Trend following strategies are simple systems that
mechanically identify when a trend is in place. The

43
system gets you in to ride the trend as long as it
remains in place. They are applied to a broad
range of securities or instruments and so need to
be simple and robust to work effectively.

The standard components of a trading following

strategy include:
Setup
Entry Trigger
Initial stop loss
Exit rules
Money management and position size rules

The correct approach to each of these trading

system components for a good trend trading
system is described in our trading systems section.

Trend following strategies typically do not employ

profit targets or time based exits because profits
come from letting trades run and develop for as
long as possible within your chosen timeframe.
Profit targets and time based exits are more
commonly used in swing trading and mean
reversion systems.

44
What Does A Successful Trend Trade Look
Like?
As an example of how a trader may benefit from
one of these trades, lets say you entered Incitec
Pivot (IPL – Australian stock shown in the chart
above) on a 200 day breakout on 24 Dec 2006 at
$0.79 with a 3 ATR initial stop at $0.75 and risked
1% of your $100,000 account on the trade. You
then held the trade and used the 200 day moving
average as a trailing exit point which kept you in
the trade until 11 August 2008 at $6.23.

On the above trade, risking 1% of your hypothetical

$100K account you would have risked $1000 on
the trade, which would have allowed you to
purchase 25000 shares (Number of shares = Dollar
Risk / Risk per share = $1000/($0.79-$0.75)). This
would give a position size of $19,750.

According to the above example, when the

position was closed the shares had appreciated to
$6.23 per share, giving you a total profit of $5.44
per share or $136,000 PROFIT. This translates to a
136 times return on your initial $1000 risk.

Warning: This trade is a hand picked example and

45
is not typical. There are no guarantees you will get
trades like this. However, these monster trades
can come along every so often though, and this
strategy is a good way to profit from them.

46
 Secret #6: The invisible trade that
almost no one knows about. Only less
than 10% of total profits are made from
traditional ‘trades’! (The other 90% of
your potential profits is determined by
THIS…)

If you have read previous articles than you know

that you need to make profits that are much
larger than your losses (so that you have positive
expectancy and you can maximize your profits
from best money management models). Buy how
to do that? Well, probably the most popular quote
in trading should be:”Cut your losses and let your
profits run”. And here I will give you some valuable
tips how to let your profits run (or maximize
them).

Letting your winners run is a topic which polarizes

traders.  There are those that swing for
consistency and trade with strict profit targets. 
These are the traders who likely view letting your
winners run as a sure fire way to lose your focus
and open yourself up for more risks.

47
Then there are those traders that think in terms of
not worrying to much about any one trade, but
has an understanding that over a longer period of
time, you only need a few winning trades to make
you profitable each year.

Before you move read any further in this article,

you need to honestly answer the question of
which trader are you?

If you are the trader that likes to trade based on

strict profit targets (i.e. up 8R) then letting your
winners run will never work for you.  The pain of
allowing a winning trade to reverse on you will be
too traumatizing and will result in you constantly
breaking your rules or worst, analysis paralysis.

Now if you are the other trader, that only reacts to

what the market presents you, I am going to
clearly articulate how you can let your winners
run.

You will see there is no magic formula or silver

bullet, but it’s more about looking at the market
through a slightly different lens.  This view of the
market will require you to incorporate a number of

48
key concepts, some of which are subjective in
nature, in order to make the big gains.

Tip #1 – You Must have a Winning Attitude

A winning attitude is a must in life if you plan on
having any sort of success.  If you don’t believe in
yourself, then who else will?

For some reason, traders have fooled themselves

into thinking that successful trading only boils
down to the latest algorithm or technical
indicator.  This couldn’t be the furthest thing from
the truth.  When you are trading, you may forget
that there are human beings on the other end of
the buy or sell transaction.  This is a head-to-head
competition to see who is right – the bulls or the
bears.

Part of the game of trading is not revealing your

hand.  The smart money will constantly force
sharp moves up or down in order to throw off the
little guy before the big move.

You are probably asking yourself, “What does a

positive attitude have to do with any of this”.

49
While everyone may have stop loss orders,
technical indicators, charts, access to news, etc.
there are some traders who are able to translate
all of this information into successful trading, a.k.a
money.

This success factor my friend begins and ends

with a winning attitude.  Think about it, when you
see your trades have a short hiccup in a current
uptrend, is your first reaction to sell to lock in your
profits?  Or do you move your stop up so quickly
that you are basically begging the market maker
to trigger your order?

The winning trader will see the same price

movement as you; however, he or she will not
interpret this information negatively.  They will see
a slight pullback in an uptrend as healthy price
action and will comfortably watch the chart move
without a negative emotion in their body.

Their ability to sit through these corrections does

not mean they have a lack of money management
principles, it just means they believe the market
will go in their favor as long as the correction or
counter moves do not damage the overall trend.

50
While everyone may have stop loss orders,
technical indicators, charts, access to news, etc.
there are some traders who are able to translate
all of this information into successful trading, a.k.a
money.

This success factor my friend begins and ends

with a winning attitude.  Think about it, when you
see your trades have a short hiccup in a current
uptrend, is your first reaction to sell to lock in your
profits?  Or do you move your stop up so quickly
that you are basically begging the market maker
to trigger your order?

The winning trader will see the same price

movement as you; however, he or she will not
interpret this information negatively.  They will see
a slight pullback in an uptrend as healthy price
action and will comfortably watch the chart move
without a negative emotion in their body.

Their ability to sit through these corrections does

not mean they have a lack of money management
principles, it just means they believe the market
will go in their favor as long as the correction or
counter moves do not damage the overall trend.

51
Do you have a winning attitude when trading or
are you thinking the market is out to get you?

If you feel in your heart you lack a winning

attitude, I’m telling you right now that you will not
be able to let your winners run.  You will find some
reason to sabotage the trade before you are able
to reap the rewards of a well-planned trading
strategy.

Tip #2 – Reverse your thinking on profits and

losses
Earlier in my trading career I would constantly
read about how you must reverse the concept of
how your brain processes winning and losing
trades in order to become a successful trader.

I remember trying such techniques as looking at

my winning trades and saying to myself, stay
calm.  Or I would say things like, “don’t focus on
the money, focus on the chart”.

I of course would end up checking my account

balance obsessively and the weight of the profits
would force me to close out the position.  Early on
I had such a hard time making money in the

52
market, that the idea of giving back a decent gain
was unfathomable.

Conversely, when I was down on a position, it

would not only affect my bank account, but also
my mood.  I felt like I was being water tortured as I
watched what appeared to be a good setup
deteriorate right before my eyes.

These negative emotions of being in a position will

wear on you the more you watch the position drift
away from your entry price in the wrong direction. 
You have to grow accustomed to thinking in
terms of probability.  The first thing you need to do
is identify your average number of winners and
losers.  If you don’t know that number, this is
probably part of your issue.

Let’s say on average you win 50% of the time.  If

you have this figured fixed in your head, you will
go into each trade knowing you have a 50/50
shot.  Now while you always aim to improve your
win ratio, this will be your baseline.

How do you think knowing you have a 50/50 shot

of putting on a winning trade will impact your

53
view when a trade goes against you?

Right, it will make the fact the trade is not working

out feel insignificant.  You will no longer be
shocked that your trade wasn’t an instant success.

Let me caveat this section of the article, before I

move on.  Thinking in terms of probabilities helps
you realize that every trade will not be a homerun
and that you must have realistic expectations in
terms of win ratios and potential profit gain. 
Thinking in this mindset will help prevent you
from constantly looking for the next hot indicator
which will magically make you profitable on every
trade.

What you should not do is go into each trade with

a losing attitude.  Meaning you say to yourself,
“well here goes another trade where I only have a
50% chance of winning.  Let me just put this trade
on and close my eyes”.

Wrong!  You place the trade without any fear or

reservation and over time you will improve as you
learn what makes you tick.  As you are tracking
your performance, you will notice that this win

54
ratio will continue to improve and what was once
50% probability will start to improve over time.

Tip #3 – Learn to Let Go

In the spirit of thinking of probabilities, you have
to realize that the market is completely unique in
every since of the word.  How the market reacted
to a news event last week will change this week. 
The key thing is getting into the position with no
real expectation of how far things can run.

You have to let go of the idea that you will

outsmart the market and begin to predict her
every move.  Trading is about reacting to the
opportunities the market presents to you on a
daily basis and not trying to dictate how she
should perform.

This is a difficult concept to grasp, because there

are so many studies out there like P&F or Elliott
Wave which have predictive modeling tools. 
These tools like most indicators want to give you
an indication of when a market is oversold or
overbought.

You have to remember that these are just signs. 

55
The same way you approach a red light, this is an
indication to you to stop your car.  Well with the
market, it will see the red light but it will decide
whether it will stop or not on its own.

You have to realize you are not dealing with a

logical entity.  The market will go and do as she
pleases.  You have to be prepared that while you
may see a red light ahead for the market, she may
decide she wants to press on and reach new
heights.  Just remember it’s not your job to take
the lead, but rather you should focus on being a
passenger in the car.

Tip #4 – Identify Your Exit Strategy

What is your exit strategy for closing a winning
position?  As you answer this question, think
about if your exit strategy permits a trade to run
wildly in your favor.

In the past I have used the price closing above or

below a exponential moving average (<100
periods) as a basis for exiting my position.  I would
say to myself, I am going to let the trade run as far
as it wants to as long as it stays above the 100-
period EMA.  Well, sure enough every once in a

56
while this would happen.  The problem was the
trade would get so far away from the average, I
would become obsessed with the idea of giving
back too much profit, so I would talk myself into
selling on the first correction.

If you are honest with yourself, this sort of thinking

is probably going on in your trading right now. 
You must learn to let go, think in terms of
probability and stick to your exit strategy.

Reason being, while the trade may erase some of

your gains on a sharp correction, you only need 2
or 3 swing trades a year to go in your favor to reap
significant gains for the years.

Tip #5 – It’s Easier when you are not down in

your overall account
It’s great to have a winning attitude as we
mentioned earlier, but it is also just as important
to be up in your account.
If you are day trading, this could mean being up
for the day or month.  If you are swing trading, this
could mean you are up for the quarter or year.

Whatever timeframe you are using it doesn’t

57
matter.  The point is you should feel a sense that
the wind is to your back.  Being in this position will
make you relax as the trade goes through the wild
back and forth swings towards your end target.

If you are up in your account, you will not feel the

need to take profits on the first retracement.  That
need to be right or just get a win on the books will
not burn at you.

Feeling like you are up and having that winning

attitude will allow you to reap larger rewards.

Tip #6 – Were you Ever Down on the Position?

Over the last years of trading, one concept has
remained constant no matter what timeframe or
strategy I use.

If I was never down on a position, not even for a

second, I am likely in a homerun.  This doesn’t
mean it’s a guaranteed win, but these types of
trades are exceptional.  It means that you were
able to interpret the exact time in which the
market was ready to start a move.

In these types of scenarios, the money will literally

58
fall into your account as the trade heads in your
desired direction.

Go back and look at your trades.  Where there any

that you were never down on?  How far did those
trades run?  How much of the move were you able
to capture?

Tip #7 – Money Management

When trading, do you think about how much you
are wagering on each position?  Have you begun
to recognize how the amount of money you are
using affects your trading?

Most traders are in what I call the growth phase. 

You have a small account, probably less than
EUR10,000 and are looking to make big money. 
The idea of steady growth over a 5-7 year span in
order to get to the big money EUR100k+ seems
too long.

Instead of taking calculated risks, where you look

to make consistent gains and let time work in your
favor.   You are likely to take riskier bets and wager
large portions of your account on a single trade.

59
This sort of approach may work in the short-term,
but over time the market has a way of weeding
out risky traders.

On the other end of the transaction is the

professional who never risks too much of their
account and continuously takes money out of the
market.

Take a minute to think through your money

management principles.  Do you ever risk more
than 50% of your account in one trade?  Do you
find yourself hoping that one trade can erase all of
your losses for the year?

Having heavily concentrated positions will not

allow you to let your winners run, because you will
likely be a nervous wreck.  Since currencies rarely
go in our favor immediately, you may experience a
significant drawdown in your account, especially if
you are using margin.

How do you think you will react the second the

trade goes in your favor?  That’s right, you will look
to close the position.  Not because you are wrong,
but because you did not manage the risk properly,

60
so you were never comfortable in the trade to
begin with.

Without a certain level of confidence, the smart

money will be able to shake you out of your
position with any minor intraday correction and
prevent you from riding the large wave.

61
 Secret #7: The key to get your trading
right not only to make lots of money,
but also to preserve your capital and
WIN in long run... you need THIS first!

Despite everything you have seen, read or know

about markets there is only one thing that really
counts – your ability to do that in real life trading
conditions! No trading strategy in the world will
help you to make money if you cannot follow it! 
That is why there has to be clear cut rules that
have no vague explanations or subjective
interpretations! Your trading rules have to be as
strict and straightforward as possible, so that you
will instantly know what to do when time arrives!
That is why you need to put all your rules in strict,
easy to follow order!
In general trading strategy consists of seven
points:
1. Set up conditions. 
2. An entry signal. 
3. A worst case stop loss. 
4. Re-entry when appropriate. 
5. Profit-taking exits. A position sizing algorithm.
6. Multiple systems for different market
conditions (if needed). 
62
The set up conditions amount to your screening
criteria; For example, for forex, there are hundreds
of currency pairs to trade.  As a result, you must
employ criteria to reduce that number down to
manageable amount.  This was discussed in
previous secrets and I already helped you in this
regard – if you are beginner, you should stick to 10
main currency pairs and to trade them! Seasoned
traders might use other pairs as well!

The entry signal would be a unique signal that

you’d use that meets your initial screen to
determine when you might enter a position—
either long or short.  There are all sorts of signals
one might use for entry, but it typically involves
some sort of move in your direction that occurs
after a particular set-up occurs. This also was
discussed in previous topics – we showed how to
react on price movements, and not try to foolishly
forecast them!

The protective stop is the worst-case loss you

would want to experience.  Your stop might be
some value that will keep you in the trade for a
long time (i.e., a drop in the price of the currency
pair) or something that will get you out quickly if

63
the market turns against you. Protective stops are
absolutely essential.  Markets don’t go up forever
and they don’t go down forever.  You need stops
to protect yourself. First five trading secrets
explained why this is critical! If you don’t have stop
loss everything else is useless!

A re-entry strategy. Quite often when you get

stopped out of a position, the prices will turn
around in the direction that favors your old
position.  When this happens, you might have a
perfect chance for profits that was not covered by
your original set-up and entry conditions.  As a
result, you also need to think about re-entry
criteria.  When might you want to get back into a
closed out position. These re-entries most likely
will be at same place where your original entries
were.

The exit strategy could be very simple. It is one

factor in your trading of which you have total
control.  It is your exits that control whether or not
you make money in the market or have small
losses.  You should spend a great deal of time and
thought on your exit strategies. This is an
important shift in thinking that you will benefit

64
from right now. You don't make money when you
enter the market you make your money upon your
exit of the market. Far too many people focus only
on market entry, or what to buy, rather than when
to sell and our trading secrets explained this very
clearly!

Position sizing is that part of your system that

controls how much you trade.  It determines how
many shares of stock you should buy or “how
much” you should invest in any given trade. It is
through position sizing that you will meet your
objectives on how much money to make!

This might be more suitable for seasoned trades

but, depending upon how robust your trading
system is, you might need multiple trading
systems for each type of market.  At minimum,
you might need one system for trending markets
and another system for flat markets. Many
professional traders have multiple systems that
operate in multiple time frames over many
markets to help offset the enormous portfolio
dependence of a single trend following system.

This information gives you idea of how your

65
strategy should look like. Essentially it will put all
trading secrets in one manageable,
understandable system. In this way you will know
how you must structure your trading and what
rules to follow. These types of trading rules have
helped me a lot! And this is foundation on how we
learn to trade our new traders! It will take some
time for you to actually implement it to your
strategy, but it is definitely worth it! Otherwise you
will be overwhelmed by so many rules, tips,
indicators and other things that you simple won’t
be able to trade!

66
 Secret #8: How to use the biggest
financial markets on planet Earth to
your own advantage...

There are literally hundreds of markets to trade –

cryptocurrencies, blue-chip stocks, penny stocks,
growth stocks, soft commodities, metals, bonds,
options, futures, swaps and much else. But forex
market stands above them all. Most likely you
have already started to trade it (or seriously
considering it). If not we will show you why we
believe it is best market for retail traders!

Owing to its high liquidity, 24/7 schedule, and easy

accessibility, forex trading has emerged as a
popular career, especially for people with
a financial background. Being your own boss with
the comforts of making money using your
laptop/mobile when its convenient for you is
enough motivation for both young graduates and
experienced professionals to consider forex
trading as a career.

There are several advantages that a career as a

forex trader, also known as a foreign exchange
trader, offers. They include:

67
Low Costs
Forex trading can have very low costs (brokerage
and commissions). There are no commissions in a
real sense–most forex brokers make profits from
the spreads between forex currencies. One does
not have to worry about including separate
brokerage charges, eliminating an overhead.
Compare that to equity or other securities trading
where the brokerage structure varies widely and
a trader must take such fees into account.

Suits Varying Trading Styles

The forex markets run all day, enabling trades at
one’s convenience, which is very advantageous to
short-term traders who tend to take positions over
short durations (say a few minutes to a few hours).
Few traders make trades during complete off-
hours.

For example, Australia’s daytime is the nighttime

for the East Coast of the U.S. A U.S.-based trader
may trade AUD during U.S. business hours, as little
development is expected and prices are in stable
range during such off-hours for AUD. Such traders
adopt high-volume, low-profit trading strategies,
as they have little profit margins due to a lack of

68
developments specific to forex markets. Instead,
they attempt to make profits on relatively stable
low volatility duration and compensate with high
volume trades. Traders can also take long-term
positions, which can last from days to several
weeks. Forex trading is very accommodating in
this way.

High Liquidity
Compared with any other financial markets, the
forex market has the largest number of market
participants. This provides highest level of
liquidity, which means even large orders of
currency trades are easily filled efficiently without
any large price deviations. This eliminates the
possibility of price manipulation and
price anomalies, thereby enabling tighter spreads
that lead to more efficient pricing. One need not
worry about the high volatility during opening and
closing hours, or stagnant price ranges during the
afternoons, which are trademarks of equity
markets. Unless major events are expected, one
can observe similar price patterns (of high, mid or
low volatility) throughout the non-stop trading.

69
No Central Exchange or Regulator
Being an over-the-counter market operating
across the globe, there is no central exchange or
regulator for the forex market. Various
countries’ central banks occasionally interfere as
needed but these are rare events, occurring under
extreme conditions. Most such developments are
already perceived and priced into the market.
Such a decentralized and deregulated market
helps avoid any sudden surprises. Compare that to
equity markets, where a company can suddenly
declare a dividend or report huge losses, leading
to huge price changes.

Such deregulation also helps keep costs low.

Orders are directly placed with the broker who
executes it on their own. Another advantage of
deregulated markets is the ability to take short
positions, something that is banned for a few
security classes in other markets.

Volatility a Trader’s Friend

The major currencies frequently display high price
swings. If trades are placed wisely, high volatility
assists in enormous profit making opportunities.

70
No Central Exchange or Regulator
Being an over-the-counter market operating
across the globe, there is no central exchange or
regulator for the forex market. Various
countries’ central banks occasionally interfere as
needed but these are rare events, occurring under
extreme conditions. Most such developments are
already perceived and priced into the market.
Such a decentralized and deregulated market
helps avoid any sudden surprises. Compare that to
equity markets, where a company can suddenly
declare a dividend or report huge losses, leading
to huge price changes.

Such deregulation also helps keep costs low.

Orders are directly placed with the broker who
executes it on their own. Another advantage of
deregulated markets is the ability to take short
positions, something that is banned for a few
security classes in other markets.

Volatility a Trader’s Friend

The major currencies frequently display high price
swings. If trades are placed wisely, high volatility
assists in enormous profit making opportunities.

71
Variety of Pairs to Trade
There are 28 major currency pairs involving eight
major currencies. Criteria for choosing a pair can
be convenient timing, volatility patterns, or
economic developments. A forex trader who loves
volatility can easily switch from one currency pair
to another.

Low Capital Requirements

Due to tight spreads in terms of pips, one can
easily start forex trading with a small amount of
initial capital. Without more capital, it may not be
possible to trade in other markets (like
equity, futures or options). Availability of margin
trading with a high leverage factor (up to 50-to-1)
comes as the icing on the cake for forex trades.
While trading on such high margins comes with
its own risks, it also makes it easier to get better
profit potential with limited capital.

Ease of Entry
There are hundreds of forex technical indicators to
draw on for short-term trades, and
several fundamental analysis theories and tools for
long-term forex trading, creating enormous
choice for traders with varying levels of experience

72
to make a swift entry into forex trading.

Important: The chances of insider trading are

almost nil (especially on major currency pairs), as
there are no insiders in the forex market, which is
dependent on global factors and perceived
developments.

High Risk, High Leverage

Forex trading is available on high leverage,
meaning one can get profit/loss exposure multiple
times of the trading capital. Forex markets allow
leverage of 50:1, so one needs to have only $1 to
take a forex position worth $50. While a trader can
benefit from leverage, a loss is magnified. But if
you are not careful forex trading can easily turn
into a loss-making nightmare, unless one has a
robust knowledge of money management, an
efficient trading strategy, and strong control over
emotions.

Self-Directed Learning
In the stock market, a trader can seek professional
assistance from portfolio managers, trade advisors,
and relationship managers. Forex traders are
completely on their own with little or no

73
assistance. Disciplined and continuous self-
directed learning is a must throughout the trading
career. Most beginners quit during the initial
phase, primarily because of losses suffered due to
limited forex trading knowledge and improper
trading.

So if you have someone that can help you to

navigate through all the risks and unknowns, forex
is best financial market for you to make money!

74
 Secret #9: How to get TONS of MONEY
from any kind of market without any
guesswork... and trade like a “Pro
Trader” STRAIGHT away!

Additional knowledge accumulation is not always

beneficial when trading financial markets because
some information can make us more ardent in our
views and opinions, so we make bold predictions
that turn out wrong. And incorrect predictions can
be costly when real money is on the line, especially
when we take positions against the prevailing
price movement and in anticipation of a quick and
sharp change in price direction, but then
the reversal never happens.

KEY TAKEAWAYS
Predicting the market is challenging because
the future is inherently unpredictable.
Short-term traders are typically better served
by waiting for confirmation that a reversal is at
hand, rather than trying to predict a reversal
will happen in the future.
Viewing price action as a series of waves is an
alternative to predicting future price moves.

75
 Establishing significant points to buy and sell
should be based on what price is actually
doing, rather than what we expect it to do.

Short-term traders, are usually better off waiting

for the movement in price to confirm a trend or
reversal rather than try to predict what is going to
happen next. Section two of this article looks at
some ways we can rework our thinking to gain a
better edge. The first section looks at the reasons
why predicting can be a problem.

The Prediction Problem

The future is uncertain. No matter how good
our analysis is, it is only as good as the
information that is available right now. We
cannot know for certain what will happen
tomorrow. Analysis in regards to likely
movement in the future is done with the idea
of "all else being equal." This means that we
assume a stock will go up based on a trend if
things remain as they are right now.

We can't predict all contingencies. While on

some days (in fact, many days) everything does
remain equal, there are always days, weeks,

76
months, or even years that defy the odds. During
these times, predicting can be especially
dangerous if expectations turn out incorrect. For
example, predicting that something will go up
when prices are falling can cripple a trader's
finances, especially since we can't know for sure
how the market will react to further news or
information that may become available. When
prices are falling, even good news may not push
prices substantially higher, and when prices are
rising, even bad news won't necessarily have a
long-term negative effect on price.

If the overall market moves higher, this does

not mean a stock will also move
higher. Analysis of individual securities is often
based on the sentiment of the overall market.
This can mean a trader expects one stock to
rise because the market is rising, or vice versa.
This does not always occur, especially in shorter
time frames. Unfortunately, an alternative
scenario also occurs where a trader expects
one stock to outperform while the rest of the
market continues to fall. Traders must be
aware of market dynamics as well as individual
stock dynamics. Either way, the end result is

77
trading in the direction of current cash flows, not
against them, whether it be in the overall market
or individual securities.

Predicting that a particular stock should move

higher is vague, and the investment decision
will rarely include a profit or stop-loss exit
point. While not always the case, inexperienced
traders predict that their equity positions will
rise and assume that they will be able to get
out near the top if they are correct. In reality,
such a vague plan rarely works out. Therefore,
all traders must have a plan for how they will
enter and exit a trade, whether the trade
results in a profit or a loss.

The holding time for stocks has decreased

along with increasing volatility. Stock
market volatility has increased over the years,
while the holding period for securities has
fallen off. Buying and holding is still a viable
strategy if the method is well-devised (as with
any trading method), but due to limited
capital, buy-and-hold investors must be aware
that volatility can reach very high levels and
must be prepared to wait out such periods.

78
Active traders trading on shorter time frames
should trade in the direction of price movements
given that volatility has increased, and even short-
term moves can
sustain overbought or oversold levels for extended
periods of time.

Statistically, prices rarely move in straight lines

for long. Predictions are often based on strong
emotional feelings—the stronger the feeling,
the stronger the trader may expect the price
reaction to be. Thus, the trader assumes that
the stock will fly in the anticipated direction in
a straight movement, leading to large profits.
When we look at all the securities in the world
and then factor in time variables, having a
position right before a major move is very
unlikely, statistically speaking. Traders are far
better off trading the averages and trading in
the direction of price movements to gain
profits as opposed to looking for one trade or
stock that rises aggressively in their favor in a
short period of time.

79
Alternatives to Prediction
Given that we now understand trying to predict a
turning point in the market can be very costly, one
asks, "If I can't predict, how do I make money?"

The answer is that we follow the price, and we can

do so by following the guidelines below. Trend
traders have traded this way for decades. They
simply wait for prices to rise or fall at certain levels
and open the positions. This is very simple
explanation of breakout strategies.

What Is a Breakout?
A breakout is a market price moving outside a
defined support or resistance level with
increased volume. A breakout trader enters a long
position after the stock price breaks above
resistance or enters a short position after the
prices breaks below support. Once the prices go
beyond the price barrier, volatility tends to
increase and prices usually trend in the breakout's
direction. The reason breakouts are such an
important trading strategy is because these
setups are the starting point for future volatility
increases, large price swings and, in many
circumstances, major price trends.

80
Breakouts occur in all types of market
environments. Typically, the most explosive price
movements are a result of channel breakouts and
price pattern breakouts such as triangles, flags,
or head and shoulders patterns. As volatility
contracts during these time frames, it will typically
expand after prices move beyond the identified
ranges.

Remember – despite anything that you have

learned before trying to forecast what prices will
do is foolish and useless. But it is critically
important to know how to react on their
movement. If you know that you know how to
spot most of the trends and thus be able to
maximize your profits.

81
Breakouts occur in all types of market
environments. Typically, the most explosive price
movements are a result of channel breakouts and
price pattern breakouts such as triangles, flags,
or head and shoulders patterns. As volatility
contracts during these time frames, it will typically
expand after prices move beyond the identified
ranges.

Remember – despite anything that you have

learned before trying to forecast what prices will
do is foolish and useless. But it is critically
important to know how to react on their
movement. If you know that you know how to
spot most of the trends and thus be able to
maximize your profits.

82
 Secret #10: Get OFF the trading “roller-
coaster”, and get more CONSISTENCY in
your trading... while making streams of
income into your trading account!

As we discussed in previous topics Money

management is the most important aspect of
system development, other than psychology, and
yet virtually any information you can find on the
market that talks about trading or system
development totally neglects the topic. In fact,
even books that are devoted to money
management say little about: the most important
aspect of the topic-position sizing. As a result, few
people really understand the implications of
money management.

In fact there are numerous money management

strategies out there but we won’t spent much
time on them (most of them are useless and in
fact outright dangerous)! I will simply show you
the most useful info you need to know! And you
will see what it could do to you portfolio! The
material is somewhat complex. However, I’ve
avoided the use of difficult mathematical

83
expressions and given clear examples. As a result,
you simply need to read the material carefully. Go
over it until you understand it thoroughly.

One of the best money management methods

used by many professional forex traders is
to always risk a fixed percentage of your
equity (e.g. 3%) per position. The percent risk
model is the first model that gives you a
legitimate way to make sure that a 1-R risk means
the same for each item you are trading. By using
this method a trader gradually increases the size
of his trades while he is winning and decreases
the size of his trades when he is losing. Increasing
the size of bets during a winning streak allows for
a geometric growth of the trader's account (also
known as profit compounding). Decreasing the
size of bets during a losing streak minimizes the
damage to the trader's equity.

Trading on forex allows to multiply your account

over time - or to make it grow geometrically.
Geometric capital growth is produced when the
profits are reinvested into the trading which leads
to progressively larger positions being taken and,
consequently, to bigger profits and losses. The

84
pace at which the account grows is controlled by
the size of the profits and by their
frequency (which should always be remembered
by forex trading system developers). While the
geometric equity growth can and should be
smooth (i.e. consistent), some traders try to
accelerate it by artificially inflating the size of their
profits by risking very high percentages of their
account. Because the actual sequence of the
winning and the losing trades can never be
predicted in advance, such practice results in very
erratic trading performance (i.e. sharp equity
fluctuations). Among other things this practice
betrays the trader's lack of confidence in his or her
trading system's long-term profit potential. As
long as the trader is confident about his trading
system he can risk small percentages (%1 to 3%) of
his account on every trade and simply watch the
system realize its potential. It should be noted that
only the geometric capital growth allows to make
regular profit withdrawals from an account (as a
certain percent of the equity) without seriously
affecting a trading system's money making ability.
This contrasts sharply with the fixed-dollar-bet
money management system (e.g. always risk $500
per trade) whose profits grow arithmetically and

85
where each withdrawal from the account puts the
system a fixed number of profitable trades back in
time.

Both proper money management and sound

trading system are required for a smooth
geometric capital growth. The speed (i.e.
"geometricity") and the smoothness of the
account's growth depend on how much you risk
per trade (as set by the money management
system) and on the trading system's accuracy and
the payoff ratio parameters (trading system's
mathematical expectation). Apart from the
controlling equity fluctuations by setting a fixed
percentage of the capital to be risked on any
trade, money management system can also
reduce equity swings through diversification
(splitting your risk capital among unrelated
currency pairs/trading systems).

How Much to Risk?

If you risk 25R of your account balance per trade
with the system accuracy of 50R and the payoff
ratio of 2 you can expect to double your account in
6. You can also expect to give away most or all of
these profits in the next few traders – as the same

86
percentages will now cut deep into your profits
when your trading system generates losing
signals. Now try to imagine how you would feel if
your car accelerates to a 500 miles per hour in a
few seconds then suddenly reverses and flies back
at the same speed. You would achieve similar
effect on your feelings or your investors' if you got
your account up to 100R in a few trades and then
lost all of the profits in the very next few trades.

It certainly pays to keep the speed (percent risked)

of your car (forex trading system) within reason so
that you can reach your destination (e.g. doubling
you account balance) without submitting your
emotional and financial well-being to excessive
risks - as both your financial and emotional
strength tends to be limited. At lower percentages
of equity risked a winning or a losing streak simply
does not have as spectacular impact on the equity
curve which results in smoother capital
appreciation (and much less stress for the trader
or for the investor). This is because when you risk
small fractions of your equity (up to 3%) each trade
is given less "power" to affect the shape of your
equity curve which leads to smaller drawdowns
and consequently greater ability to capitalize on

87
the winning signals in the future. In other words,
the size of drawdowns is directly proportional to
the percent risked. In addition to being directly
proportional to the R risked, drawdowns
are inversely proportional to both the accuracy
and the payoff ratio (average win/average loss) of
a trading system.

A drawdown is the distance from the lowest point

between two consecutive equity highs to the first
of these highs. For example, if your account
increases from $10,000 to $15,000 (first equity
high) then drops to 12,000 (lowest point between
equity highs) and then rises again to $20,000
(second equity high) your drawdown will be
$3,000 ($15,000-$12,000) or 20% ($3,000/$15,000).
When deciding on the percent to be risked on
each trade you should keep in mind that as the
drawdown grows arithmetically, the profits (and
psychological fortitude to stick to the system)
required to get out of it increase geometrically. As
a general rule the higher the accuracy of a trading
system AND the higher its payoff ratio the safer it
is to risk more per trade. Note: It is best not to rely
too much on the theoretical probability of a large
number of losing trades happening in a row. In

88
other words, because the probability of a few
losses happening in a row is very low it doesn't
mean this cannot happen in your trading.
Suppose you trade a system which generates 60
winning trades out of 100 on average. The
probability of a profitable trade is always 60%,
while the probability of a losing trade is always
40% with such a system. The chances of 5
consecutive losses can be calculated by
multiplying 0,4 five times by itself or
0,4*0,4*0,4*0,4*0,4 which results in 1,02%. Even if
the probability of roughly one percent does look
very remote this is not a zero probability and quite
likely to happen in real trading. Moreover, given
that the outcome of any single trade can be
considered random there is nothing in the world
that can guarantee that your system's next five
trades will not be all losses or all profits, for that
matter.

Therefore, it is best to be prepared for such an

outcome in advance by risking less of your
account per each trade. Closely related to this is
the idea of luck in trading, which can be defined
as the clustering of large number of profitable
trades in narrow periods of time. For example, you

89
can easily generate a string of 12 winning trades
on the forex trading simulator with the system
accuracy set to 60%. The probability of such an
event is equal to 0,6 raised to the 12'th power or
0,2% or 1 in 500. Despite such a low probability you
can expect to see 12 or more successive winners in
your trading  when you trade long enough with a
system that has success rate equal to %60. Even if
the short-term effect on the equity (and trader
morale) of such a long series of successful trades
can be quite dramatic, it plays little role in the
long-term success as a currency trader. In other
words, the fact that your trading system has just
generated a long run of profitable trades doesn't
say very much about its long-term profit potential,
which should instead be measured by its
mathematical expectation.

With this information in mind it is best to always

risk a maximum of 1% of the equity if you are
managing other people's money and a maximum
of 3% of the equity if you are trading with your
own funds.

Money management system is similar to the forex

trading system in that sticking to it is vital to the

90
long-term success in currency trading. Once you
decide on the percentage of equity that you will
risk per position you should never deviate from
this number and try to stay as close to it as
possible - no matter how bad or good your system
performance is. This question becomes especially
important when you decide on the type of
account that you open - if it will be a mini or a
standard trading account.

Note: When you select the account type you

should pay close attention to the level of the
leverage offered by your forex broker. Even if high
leverage (from 1:100 and up) allows to trade
multiple lots with very little money of your own, it
can be dangerous when it forces you to overtrade
- to assume positions which risk more than the
percentage value set by your money management
system. For example, you might be compelled to
risk $400 (40 pip stop-loss) on a very attractive
EUR/USD trade while on a standard account with
the maximum allowable risk per trade set at 3% of
$10,000 or $300. The only way to stick to your
money management system would be
to bypass this trade and therefore undermine your
system's profitability (and your morale). You

91
wouldn't need to avoid this signal or use smaller
stop-loss than the one suggested by your system
if you traded at half the leverage (which would
mean only $200 risk per trade) or if you traded on
a mini account altogether - as is shown by the
allocation efficiency calculator.

92
 Secret #11: These quick tips help you
keep score on your TRADING GOALS
(and give you constant edge over
others!)

Everyone that wants to be a successful trader and

consistently make money in the forex market
needs to have strong mental fortitude. You must
have a successful mindset, as it is one of the most
important tools that you will need to develop your
trading career. Before I go on about mental
training, you should know that this isn’t going to
be an article about trading psychology, where you
must learn how to control your emotions in the
marketplace. Those are things you already know
about, but you must also have knowledge about
mental tools for forex trading success. They hold
great importance because if you want to become
a successful trader you must develop
your mentality to equip yourself with important
tools that ensure success as a forex trader.

Forex trading is a unique profession because you

have limited control over the market situation. The
only control you have is when to enter the market,

93
where to exit, and how-to-handle different market
dynamics. The rest of the stuff is unknown and
complex. Ask any professional trader for advice on
forex trading success, and they will all say that to
survive and develop a successful trading career,
you must have immense mental fortitude. It is
important to have a solid mentality, so you can
overcome the various challenges in the market,
and deal with problems when they arrive. If you
have a breakdown or get flustered or frustrated
while trading, you have already lost.

Mental Strength Holds the Key to

Trading Success
The lesson we are going to impart today is related
to real-world mental thought processes, and how
they are used by professional traders to succeed in
trading and in life. We are going to highlight the
thinking processes of experienced forex traders,
and how they act in different situations, which
helps find great success in the forex markets. We
will go through specific mental routines and
thought processes that you must practice and
master to get great results.

The key thing is going to be creating a mental

94
routine and sticking to it religiously. The main
difference between a professional trader and a
newbie is their trading mentality. This is one of the
truths of life because the only divide between
someone struggling in any field and successful
people is the mentality. To be completely blunt, if
you want to achieve success in trading, you must
develop the right mindset. Here is how you can go
about developing the right mental tools for forex
trading success:

Have an Action Plan

It is imperative that you have a written action plan
for every possibility after you enter a trade. That is
the defining characteristic of a professional trader
because they manage to mentally detach
themselves from live trades, which is something
newbie and losing traders struggle to do. Your
goal is to have a proper plan in place after you
press that buy or sell button on a live trade. If you
don’t have a plan inplace and are reacting to the
market, you will be second-guessing yourself,
which isn’t going to help you find success in the
marketplace.

95
Learn to Love Your Losses
If your trading plan results in a loss and it was your
own strategy, then don’t get disheartened. It
doesn’t matter what the outcome was, what does
count is long-term discipline and not missing out
on profit or suffering a single loss. The forex
market is extremely competitive, and you will be
competing against traders with more experience,
more capital, and more knowledge of the market.
Therefore, you must be prepared to accept your
losses, since no one wins all their trades in the
market. So, how do you compete with them?

One thing that you have, which others may not, is

a burning desire to become the best and play the
trading game with more discipline than them
since that is the only way you can beat them. The
point we are trying to highlight here is that you
will be competing against real people, and it isn’t
just you against a computer screen and charts.
Forex trading is the ultimate mental sport
because it is a true battle of wits where you will be
competing against the big boys.

Be Humble with Your Profit Taking

When it comes to profit-taking, you should define

96
your targets before you enter the market and take
them according to your plan. Be happy and
content with what you have banked, and don’t
think about what you could have gotten. You
must leave the ego outside because you must
concentrate on reading the current market
situation. There is no point in letting ego take over
and try over trading to show off, compensating for
previous losses, greed, or revenge trading.

You must remain humble and focus on the final

number, you have banked. It is important to check
yourself when trading, so you know exactly how
you reacted to market situations. Keep an eye on
your emotions when you’ve won, when you’ve lost,
or when you break your own rules. Money tends to
mess with the minds of people, and whether
you’re losing money or making it, there are going
to be psychological side effects that come with
the package. Professional traders, who have
consistently made money, acknowledge this and
know the best way to counter this is by being
humble and honest in trading.

Fix and Improve What Is Needed

Mental fortitude and preparation are the two most

97
important tools for forex trading success, but
apart from that you must constantly fix and
improve your trading strategy. Don’t be content
with your strategy, because you need to
constantly want to improve and develop new skills
so that you can plan better trading strategies. This
requires long-term and short-term mental
preparations, but it will result in more focus and
adaptability when you are faced with unexpected
challenges.

Teach Others about Forex Trading

This may appear funny to some people, but the
best way to learn forex trading is by teaching it to
others. That is the best way to explain your own
trading strategy to yourself, and it will also allow
you to fine-tune your trading definition and to
uncover black spots in your strategy. Your
students will challenge you by asking good and
tough questions, and you will need to have good
knowledge to provide them with great answers.

The effect teaching will have on your forex trading

career will surprise you, because it will help build
your confidence, and you will have more eyes
monitoring you. It will help you build your own

98
team, group, or community where your trading
values are its foundation.

It will allow you to develop a more elaborate and

deeper understanding of your own forex trading.
Success in forex trading comes from having the
right mindset to handle pressure and temptation
while remaining disciplined consistently while
trading on the market.

99
 Secret #12: How to be able to find the
right conditions to PROFIT from best
MARKETS, instead of you chasing after
many useless trades!

When you trade Forex, you trade with currency

pairs from two different countries. The Forex
market stays open from 5 pm EST on Sunday to 4
pm EST on Friday every week and it is open for 24
hours a day during trading days.

If you are new in this market, you might feel a little

confused with so many trading instruments to
trade. Often you will find hundreds of currency
pairs on your MetaTrader 4 or MetaTrader 5
trading terminal. So, with so many trading
pairs what are the best Forex pairs to trade? The
answer to this question often depends on you as a
trader. You need to take your time to understand
what kind of a trader you are. Once you identify
your strengths and weaknesses you will analyze
the market. You will need to look into the list of
Forex pairs compatible with your trading strategy,
to determine the best pairs to trade. You can also
use our Currency Correlation Matrix below to use
more than one pair in your strategy.
100
Types of Forex Pairs to Trade
Broadly speaking, we can separate Forex pairs into
three categories:
Majors (Major Forex Currency pairs)
Minors (Minors Forex Currency pairs)
Exotics (Exotic Forex Currency pairs)

What are major Forex currency pairs?

Major Forex pairs are the most traded pairs of the
Forex market. Some traders may disagree on the
exact list of Majors forex pairs due to the change
in liquidity in recent years. Overall speaking Major
Currency pairs are EUR/USD, USD/JPY, GBP/USD,
AUD/USD, USD/CHF, NZD/USD and USD/CAD.

These currency pairs consume as much as 85% of

the Forex Market Liquidity.

What are minor Forex pairs?

A currency pair without the US dollar inside is
called a minor currency pair. Minor Currency pairs
are not linked with the US Dollar but include the
Euro, Pound, and Yen, which are the three most
traded currencies besides the USD.

Minor Forex pairs have a smaller market share

101
compared to major pairs as they can exhibit lower
market liquidity. There are many minor pairs. Here
is the list of the most traded minor Forex currency
pairs from 10 of the top Forex brokers we have
spoken to:

EUR/CHF – Euro/Swiss franc

EUR/GBP – Euro/British pound
GBP/AUD – British pound/Australian dollar
EUR/JPY – Euro/Japanese yen
EUR/NZD – Euro/New Zealand dollar
EUR/AUD – Euro/Australian dollar
EUR/CAD – Euro/Canadian dollar
CHF/JPY – Swiss franc/Japanese yen
GBP/JPY – British pound/Japanese yen
AUD/JPY – Australian dollar/Japanese yen
NZD/JPY – New Zealand dollar/Japanese
yenGBP/CHF – British pound/Swiss franc
CAD/JPY – Canadian dollar/Japanese yen
GBP/CAD – British pound/Canadian dollar

What are exotic forex pairs?

An exotic Forex pair is a combination of a major
currency and the currency of a developing
economy. Exotic Forex currency pairs have less
volume compared to the major and minor

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currency pairs. As a result, the spreads can be
higher when trading them. In the meantime,
volatility in these pairs can be much higher than
Majors and Minors. There are certain MT4
indicators for exotic pairs only.

We spoke to a few brokers such

as HYCM and Plus500 asking the following
questions:

– Which exotic pairs traders generally prefer to

trade?
EUR/TRY- Euro/Turkish lira
USD/HKD- US dollar/Hong Kong dollar
JPY/NOK- Japanese yen/Norwegian krone
NZD/SGD- New Zealand dollar/Singapore dollar
GBP/ZAR- British pound/South African rand
AUD/MXN- Australian dollar/Mexican peso

– Which of the Exotic pairs traders make the

biggest loss in general?
GBP/TRY- British Pound/Turkish lira
GBP/MXN- British Pound/Mexican peso
AUD/HKD- Australian dollar/Hong Kong dollar

103
List of 10 Best Forex Pairs to Trade
There are around 200 nations in the world. Most of
these countries have their own currencies. While
most of the countries allow Forex trading, some
have strict regulations and some countries have
banned Forex trading. Additionally, religion plays a
strong role too.

From the currency pairs perspective, not all

currencies are worth trading. Let’s go with our list
of 10 best Forex pairs to trade.

Here is the list of the most popular currencies in

the world. These are also the world’s strongest
currencies.
US Dollar (USD)
Euro (EUR)
Swiss Franc (CHF)
Japanese Yen (JPY)
British Pound (GBP)
Australian Dollar (AUD)
Canadian Dollar (CAD)

When you combine these currencies with the US

dollar, you pretty much get the list of the best
Forex currency pairs to trade.

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#1 EURUSD
EURUSD is the most traded currency pair of the
Forex market. Over 24.0% of the daily Forex
volume derives from EURUSD trades. This pair is
very popular among the traders since it connects
the world’s two biggest economies:

Euro representing the European economy;

USD representing the US economy.

Since EURUSD volume and demand is high, the

spread for this pair is often very low. Traders enjoy
a smaller charge with sufficient liquidity and tight
spreads.

Several fundamental factors determine the

EURUSD exchange rate. Here is the list of the
most important fundamental events for EURUSD
traders:

The interest rates set by the European Central

Bank;
US Federal Reserve interest rate
announcements;
NFP figures announcements;

105
The currency with a higher interest rate often
creates a higher demand. But nowadays almost all
of the central banks are rallying towards negative
interest rates. The US FED so far is the only
exception. As a result, USD has been
strengthening in the recent past.

#2 GBPUSD
Brexit has shaken the GBPUSD market
significantly. However, this pair is still the second
most popular currency pair of the world.

Why is GBPUSD called cable?

Often you will find traders calling GBPUSD as
‘cable’. The term “Cable” comes from telegraph
days. Before the introduction of the Euro, GBPUSD
was the most traded currency pair. Back then
traders would telegraph the bid and ask quotes
between London and New York. Since then trades
call GBPUSD as “cable”.

In 2019, this pair made up more than 9% of the

total daily Forex transactions.

Like other currency pairs, the strength of GBPUSD

comes from the strength of the British and

106
American economies. If the British economy
grows faster than America, it is likely that the
pound will be stronger against the Dollar.
However, any better results from the American
economy may reverse the scenario. Since the
Brexit uncertainty has shaken the British
economy, GBP has depreciated against USD in the
past couple of years.

Just like EURUSD, GBPUSD is affected by interest

rates announcements from the Bank of England
(BoE) and the FED. The subsequent difference
between the interest rates on the Pound and the
Dollar can have a great impact on the price of the
GBPUSD pair. At the moment Brexit updates also
have a significant effect on GBPUSD volatility too.

#3 USDJPY
USDJPY pair is also known as ‘the
gopher’.  USDJPY is one of the most-traded Forex
pairs on the market, which represents
approximately 13% of all daily Forex transactions in
2019.

Did you know? Japanese rice traders were the

first people to use candlesticks.

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Like EURUSD, traders also like USDJPY due to its
strong liquidity. Japanese yen is the most traded
currency in Asia and the US dollar is the most
common currency in the world. Thus, USDJPY
spread is often the lowest in the Forex market.

The Fed, BOE, and ECB, the Bank of Japan set the
interest rates for the Japanese economy are the
main fundamental market drivers.

USDJPY often has a negative correlation with

EURUSD and GBPJPY.

#4 AUDUSD
Trades often call AUDUSD as  ‘Aussie’. This pair
represents the Australian dollar against the US
dollar. In 2018 AUDUSD volume was 5% of the
global Forex volumes. Since Australia is an export
country, AUD as a currency fluctuates with the
commodities, such as iron ore and coal.

Falling commodity prices will often put AUD

under pressure. Therefore, AUDUSD falls into the
commodity currencies category too.

Like previously mentioned currency pairs, the

108
AUDUSD exchange rate is also affected by the
interest rate decisions between the Reserve Bank
of Australia (RBA) and the FED. If American
interest rates are low, USD will weaken against
AUD, and the AUDUSD price may go up.

#5 USDCAD
USDCAD is another commodity currency. Traders
often call USDCAD as the ‘loonie’ on account of
the loon bird that appears on Canadian dollar
coins.

The USDCAD transactions make approximately 4%

of the daily Forex trades. Canada is a major Crude
Oil exporter. Hence, the strength of the USDCAD
pair links to the price of oil.

Since oil is priced in US dollars, Canada can earn a

large supply of US dollars through its crude oil
exports. As such, with the increase of oil prices, the
Canadian dollar will strengthen against the US
dollar.

In a general rule, the US dollar weakens when the

price of oil increases.  Therefore, if the dollar
weakens, more US dollars will convert into other

109
currencies to buy the same amount of oil.
However, expensive oil means that the Canadian
dollar may strengthen due to the close ties
between the Oil price and the Canadian dollar.
Moreover, traders should keep an eye on both
Brent crude and US crude when trading USDCAD
currency pair.

#6 USDCHF
USDCHF is the 6th most popular forex pair on our
list. CHF stands for Swiss Franc, the national
currency of  Switzerland. This pair is popular for
the Swiss financial system, which is a safe haven
for investors and traders.

The Swiss franc is a safe haven asset. Therefore,

the Swiss franc will see less interest from traders
in case of any global financial crisis. With the
increase of volatility, the price of this pair would
drop as CHF strengthens after experiencing
increased investment. USDCHF accounts for
approximately 3% of the global Forex transactions.

#7 EURGBP
EURGBP is the first Minor Forex Currency pair that
makes it to our list of top 10 most traded forex

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pairs. Many traders will often lose money trading
EURUSD. This is because of the historic link given
in the proximity of the UK to Europe.

Despite the difficulties in EURGBP technical

analysis, this pair makes 2% of the global Forex
transactions every year. Like the other currency
pairs, traders should keep eyes on any ECB and
BoE announcements which would increase
volatility further.

In recent years, the fluctuation in this currency

pair has become unpredictable due to the
uncertainty surrounding BREXIT. However, the
high level of volatility may attract traders, but it
has an adverse impact on a risk management
strategy.

#8 AUDJPY
AUDJPY is another minor pair making to our top
10 list. This cross pair has its main volatility during
the Asian session.

Japan is an export-based economy, while Australia

is a commodity-based economy. Global
uncertainty and any volatility in the commodities

111
put an impact on the AUDJPY pair. Like other
currencies, any interest rate decisions from RBA or
BOJ put an impact on the AUDJPY price.

AUDJPY is a hard Forex pair to trade, however,

once you master your trading strategy, you will
find synergies.

#9 NZDUSD
Many traders love NZDUSD. Statistically, NZDUSD
is the most trader friendly currency pair.

The economy of New Zealand mostly depends on

dairy products. Therefore, the NZDUSD price
moves with the price change in the global dairy
industry. Price rise in the dairy industry will bring
bullish sentiment to the NZDUSD price. On the
other hand, a decrease in Dairy products price sets
bearish sentiment.

#10 GBPJPY
In 2018 GBPJPY was the most predictable
currency pair according to the AtoZMarkets trader
survey.

This pair is one of the most volatile Forex pairs.

112
Almost any global news will move the GBPJPY
price. Many long term traders favor this pair as it
moves with long legs with lots of pips. However,
small traders with small investments may struggle
to make a profit from this pair. This pair is also one
of the best scalper friendly minor forex currency
pairs too.

Conclusion
The dynamics of foreign exchange trading is very
interesting, and it can provide a boost to the
global economy. However, since is highly volatile
you should never invest any funds that are vital for
your livelihood. You should only trade with brokers
that you trust, and trade live after you test your
strategy with demo accounts.

Meanwhile, according to our broker interviews,

USDRON and USDBGN pairs are the least favourite
currency pairs in the Forex market.

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 Secret #13: The 16-steps I use to create
incredible strategies that serve me for
the REST of my trading career and
beyond…

Did you know that there are critical steps that

you need follow to become a very successful
trader?

Through my work with top traders I’ve discovered

17 key steps that will ensure your consistent
success as a trader.

So let’s take a look at these steps one by one, with

the first seven steps involving the development of
a sound business plan.

First, assess your beliefs about trading

and about yourself.
Although it’s difficult to grasp, did you know that
nobody actually trades the market?  Instead, you
always trade your beliefs about the market.

So isn’t it time you learned exactly what you are

trading?

114
Second, determine your objectives for
trading.
Trading experts know that understanding your
objectives thoroughly is half the battle in
developing a system, yet most people have never
taken the time to even consider what their
objectives might be.  Thus, you need to determine
exactly what you want out of your trading system.

We’ve found that most traders are missing one

key ingredient in their objectives—financial
freedom.

For example, one our traders told me that he had

made 1000% return in 2019—that’s right 1000%. 
But that trader was missing this critical ingredient.
And because he didn't have any objectives on
what it meant for him to be financially free in
terms of profit-taking, it’s probably the difference
between whether or not all of that profit will be
put to good use or lost in future trading.

Third, understand the big picture.

What’s the market doing overall and how can I
measure it for myself?  This is a very important
skill—and if you really take the time to do it, it will

115
probably help you prevent a disaster.

Fourth, include three strategies in your

business plan that are compatible with
the big picture.
Although there are thousands of systems out
there, there are not many types of strategies. 
These are things like trend following, band
trading, and value investing.  You need to learn
how the strategies that you plan to adopt work,
why they work, and how you can adapt them for
yourself.

Fifth, learn what your personal edges might be

and how they set you off from the crowd.

Having an edge in the markets isn’t just a slight

advantage; it could be the pivotal difference in
your success. So it’s very important to list your
edges in your business plan and to be able to
capitalize on them.  Discover the key edges that
almost any retail trader has over market makers or
institutional investors.  Or if you are a CTA, hedge
fund, or portfolio manager, learn your particular
edges.

116
Sixth, develop a worst-case contingency
plan.
They key to a successful business plan is to be able
to overcome disaster.  Most people don’t even
consider this until it’s too late. Learn how to
generate an extensive worst-case contingency
plan with strategies of how to deal with each
disaster so that they minimize the effect on your
trading business.  Learn the key areas around
which your worst-case contingency plan should
revolve and get a good start on creating them.

Steps 8 through 13 are designed to deal with the

general formula for developing strategies and
trading systems for your business plan.

Seventh, select your trading market.

Are you going to trade stocks?  Are you going to
trade futures?  Are you going to trade mini-forex
or real forex through the big banks?  Are you
going to do options on any of these?  Whatever
you select must take into account the big picture
and what is likely to happen in the next five to ten
years.

117
Eight, prepare to develop a strategy.
This involves doing an extensive study of the
primary markets that you wish to trade.  It also
involves developing realistic, but challenging
goals, about your performance.  And you must
determine your current beliefs about the market
you wish to trade and the strategies that must
work.

Ninth, master the key steps in strategy

development and how to test for each.
You need to learn about testing exit signals, how
to determine your initial risk, and how to select
and test your profit taking exits.  This is not a
substitute for any of our specific system
development work.  It just involves taking these
key stops and being able to test your work.

Tenth, properly evaluate your system.  Here are

two major ways to evaluate your system, listed in
terms of importance:

Your win rate.

Your expectancy.

118
Eleventh, get to know your system well
without a lot of cost.
The best way to do this is to trade at a low position
size to determine if your initial testing was
accurate.  Through this testing, you’ll be able to
develop a simple position sizing model to fit your
objectives.

Twelfth, develop a position sizing model

to meet your objectives.
You must understand that the key to developing a
system is to develop position sizing models that
will do the job.  This step is one of the keys to
developing a system that fits you and very few
people understand how to do it.

The remaining steps involve working on the most

important factor in your trading—you. Most
people totally ignore this point, but it's critical to
top trading performance.

Thirteenth, do a complete self-

assessment.
In order to do this you must understand the
following:

119
How your personality type impacts your trading.
How to develop the personal responsibility that
you must have as a trader and assess yourself on
it.
How to assess your beliefs and values.
And you must understand some of the key issues
that might really interfere with your trading.

Fourteenth, do something on a regular

basis to really improve you discipline
and emotional control.
This is the step that will separate you from other
traders and launch you toward top trader status.

Fifteenth, get your body in top

condition.
You mind can only be in top condition if your body
is in top condition.  There are various procedures
for doing so, including both diet and exercise. 
Your job is to decide what’s right for you.

Sixteenth, develop a top-down approach

to discipline.
The procedures for doing this are covered in our
Psychology course. And if you combine top-down

120
discipline with regular self-work, you’ll be amazed
at the difference in your trading.

121
 Secret #14: The key to ‘weathering the
storm’ and getting in FRONT of trends...
this is the exact BLUEPRINT we use as
we look at every new trading
opportunity!

Diversification in Currency Trading

Diversification is the distribution of the risk capital
across unrelated currency pairs and/or trading
systems for the purpose of increasing the
consistency of trading performance. For example,
if you trade one system on two unrelated currency
pairs you can protect yourself against long losing
streaks that any of these pairs can go through on
its own. When you get a losing signal on the first
pair, the second pair might generate a winning
trade which will cover the loss of the first pair or
vice versa. By splitting the risk capital (% of your
equity) among two pairs you can be sure that
when both pairs generate losing trades at the
same time your total risk will not exceed the
maximum value set by your money management
system. This way you can achieve smoother capital
appreciation than you would be able to do if you
traded only one pair. For an interactive

122
demonstration this concept please visit the
currency diversification simulator. It should be
noted that this calculator assumes zero correlation
between the pairs or systems (more on correlation
below).

Be sure to compare the values in the

"Consistency" cells for each of the pairs when they
are traded separately with the value of consistency
achieved when trading them together (in the
"Trading A&B" column). The combined consistency
will almost always exceed the consistency of either
of the pairs when they are traded individually.

The more unrelated pairs or systems you add to

your portfolio the better protection you can have
against the risk. For example, when trading one
trading system on two absolutely uncorrelated
currency pairs you decrease the probability of a
losing trade (two pairs generating a losing trade
simultaneously) by the percentage value equal to
the system's accuracy. Suppose your system has
the success rate of %60, therefore the probability
of a losing trade for each pair is %40. The
probability that both pairs will generate a losing
signal is calculated by multiplying %40 by itself -

123
which results in %16. This is the %60 decrease
(24/40=0,6) in the probability of a losing trade
achieved when you trade both pairs
simultaneously. If your system has %70 success
rate you can reduce the probability of a loss by
%70 if you trade two unrelated pairs instead of
one. The probability of a losing trade occurring for
both pairs at the same time is %9 (%30*%30) which
is a %70 decrease in the likelihood of a loss if you
traded only one pair (21/30=0,7). I will note that
even if you diversify into two or more weakly
correlated currencies/trading systems, this won't
eliminate the drawdowns completely. However
weak is the correlation between the pairs or
trading systems, they are likely to go through the
losing streak all at once, at some point in the
trading. You can see this by modelling the
performance of two similar trading systems with
the help of the currency diversification simulator
(e.g. set accuracy to 40 and payoff ratio to 2 for
both A and B) and checking if the yellow curve on
the DRADOWN chart is moving in sync with the
other two curves.

There is a weak relationship between two pairs if

the absolute value of their correlation coefficient

124
(usually denoted by r) doesn't exceed 0,3 (i.e. it can
be anything from -0,3 to +0,3). A medium strength
relationship exists when the absolute value of the
coefficient is greater than 0,3 but less than 0,5.
There is a strong relationship between two pairs if
r is greater than 0.5 in absolute terms (i.e. bigger
than 0.5 or less than –0.5). Currencies are said to
be highly correlated if the absolute value of their
correlation coefficient is equal to or bigger than
0,8. You can visualize these concepts with the help
of the interactive correlation simulator. (Please
note: This calculator requires that you have Flash
installed and Javascript enabled in your browser)

Suppose you trade two currency pairs which are

highly positively correlated like the EUR/USD and
the GBP/USD (daily r is equal to 0,8 on average).
When you get a sell signal for EUR/USD your
system is likely to generate the same signal for the
GBP/USD. If the first signal results in a loss this
increases the probability that the second signal
will not be profitable either. The same holds if you
are trading very negatively correlated pairs with
the same system - like EUR/USD and USD/CHF
(daily r is equal to -0,9 on average). Selling one lot
of EUR/USD and buying one lot of USD/CHF at the

125
same time (e.g. on the break of a trendline which
usually is simply a mirror image of the trendline
visible on the other pair's chart - e.g. set "Target
Correlation" to -0,9 on the correlation simulator
and notice how similar are the imaginary
trendlines for A and B) amounts roughly to selling
2 lots of EUR/USD or buying 2 lots of USD/CHF
individually - with no reduction in risk whatsoever.

Quote:"Through bitter experience, I have learned

that a mistake in position correlation is the root of
some of the most serious problems in trading. If
you have eight highly correlated positions, then
you are really trading one position that is eight
times as large." Bruce Kovner in Jack D.
Schwager's book "Market Wizards: Interviews with
Top Traders".

In contrast, when you trade two uncorrelated or

loosely correlated pairs you can expect your
system to perform differently on each pair which
should result in smoother overall trading
performance. As an example you can buy a touch
of a uptrendline on one pair (e.g. USD/JPY) and sell
the top of the range on another unrelated pair
(e.g. GBP/CHF, which has an average r of 0,3 with

126
USD/JPY) without having to worry that price
developments in USD/JPY might "spill over" into
GBP/CHF (or the other way round) and by doing so
spoil your whole trading setup. As the next best
alternative, you can reduce the risk by opening
opposing trades in the positively correlated pairs
or same direction trades in the negatively
correlated pairs - by using a different system for
each of the pairs, as is described below. Yet
another way you can use correlation is to select
among highly correlated pairs that pair which
offers the highest reward potential under the
current market conditions and trade only it.

You can monitor the correlations between the

currency pairs that you trade by using the
information on the currency correlations page
(which contains most up-to-date correlation data
for the commonly traded currency pairs). I will
note that it is best to keep the number of the
currency pairs in your portfolio to a minimum
because the number of the correlations to be
tracked and the time required for this rises
geometrically with the addition of each new pair.
The formula for calculating the number of
correlations between n number of pairs is

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[n*(n-1)]/2. You can start with one currency pair
and gradually increase to a maximum of four pairs
(with 6 correlations to monitor) as your experience
grows.

When you diversify into different trading

systems you should look for a combination of
systems which results in the lowest possible
correlation between their returns. Ideally you
would trade only two systems which are perfectly
negatively correlated (r=-1). This means that
whenever one system generated a losing signal
the other would produce a winning signal and vice
versa. Examples of this possible combination are a
mean-reversion system (e.g. RSI) and a trending
system (e.g. Moving average) - for more examples
please consult Richard L. Weissman's book
"Mechanical Trading Systems: Pairing Trader
Psychology with Technical Analysis". If you could
find such a perfect combination of systems you
would not see a single loss (as their net result)
because the loss of one system would always be
covered by the profit of the other. You can see
how this works if you enter minus one into "Target
Correlation" cell on the system correlation
simulator (Please note: The size of this page is

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0,7 Mbs and it requires that you have Flash
installed and Javascript enabled in your browser).
In practice, it is extremely hard to find perfectly
negatively correlated systems. Nevertheless, even
if systems traded are only mildly negatively
correlated the trader can expect to benefit from
the risk reduction offered by the diversification.

Everyone that wants to be a successful trader and

consistently make money in the forex market
needs to have strong mental fortitude. You must
have a successful mindset, as it is one of the most
important tools that you will need to develop your
trading career. Before I go on about mental
training, you should know that this isn’t going to
be an article about trading psychology, where you
must learn how to control your emotions in the
marketplace. Those are things you already know
about, but you must also have knowledge about
mental tools for forex trading success. They hold
great importance because if you want to become
a successful trader you must develop
your mentality to equip yourself with important
tools that ensure success as a forex trader.

Forex trading is a unique profession because you

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have limited control over the market situation. The
only control you have is when to enter the market,
where to exit, and how-to-handle different market
dynamics. The rest of the stuff is unknown and
complex. Ask any professional trader for advice on
forex trading success, and they will all say that to
survive and develop a successful trading career,
you must have immense mental fortitude. It is
important to have a solid mentality, so you can
overcome the various challenges in the market,
and deal with problems when they arrive. If you
have a breakdown or get flustered or frustrated
while trading, you have already lost.

Mental Strength Holds the Key to

Trading Success
The lesson we are going to impart today is related
to real-world mental thought processes, and how
they are used by professional traders to succeed in
trading and in life. We are going to highlight the
thinking processes of experienced forex traders,
and how they act in different situations, which
helps find great success in the forex markets. We
will go through specific mental routines and
thought processes that you must practice and
master to get great results.

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The key thing is going to be creating a mental
routine and sticking to it religiously. The main
difference between a professional trader and a
newbie is their trading mentality. This is one of the
truths of life because the only divide between
someone struggling in any field and successful
people is the mentality. To be completely blunt, if
you want to achieve success in trading, you must
develop the right mindset. Here is how you can go
about developing the right mental tools for forex
trading success:

Have an Action Plan

It is imperative that you have a written action plan
for every possibility after you enter a trade. That is
the defining characteristic of a professional trader
because they manage to mentally detach
themselves from live trades, which is something
newbie and losing traders struggle to do. Your
goal is to have a proper plan in place after you
press that buy or sell button on a live trade. If you
don’t have a plan inplace and are reacting to the
market, you will be second-guessing yourself,
which isn’t going to help you find success in the
marketplace

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Learn to Love Your Losses
If your trading plan results in a loss and it was your
own strategy, then don’t get disheartened. It
doesn’t matter what the outcome was, what does
count is long-term discipline and not missing out
on profit or suffering a single loss. The forex
market is extremely competitive, and you will be
competing against traders with more experience,
more capital, and more knowledge of the market.
Therefore, you must be prepared to accept your
losses, since no one wins all their trades in the
market. So, how do you compete with them?

One thing that you have, which others may not, is

a burning desire to become the best and play the
trading game with more discipline than them
since that is the only way you can beat them. The
point we are trying to highlight here is that you
will be competing against real people, and it isn’t
just you against a computer screen and charts.
Forex trading is the ultimate mental sport
because it is a true battle of wits where you will be
competing against the big boys.

Be Humble with Your Profit Taking

When it comes to profit-taking, you should define

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your targets before you enter the market and take
them according to your plan. Be happy and
content with what you have banked, and don’t
think about what you could have gotten. You
must leave the ego outside because you must
concentrate on reading the current market
situation. There is no point in letting ego take over
and try over trading to show off, compensating for
previous losses, greed, or revenge trading.

You must remain humble and focus on the final

number, you have banked. It is important to check
yourself when trading, so you know exactly how
you reacted to market situations. Keep an eye on
your emotions when you’ve won, when you’ve lost,
or when you break your own rules. Money tends to
mess with the minds of people, and whether
you’re losing money or making it, there are going
to be psychological side effects that come with
the package. Professional traders, who have
consistently made money, acknowledge this and
know the best way to counter this is by being
humble and honest in trading.

Fix and Improve What Is Needed

Mental fortitude and preparation are the two most

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important tools for forex trading success, but
apart from that you must constantly fix and
improve your trading strategy. Don’t be content
with your strategy, because you need to
constantly want to improve and develop new skills
so that you can plan better trading strategies. This
requires long-term and short-term mental
preparations, but it will result in more focus and
adaptability when you are faced with unexpected
challenges.

Teach Others about Forex Trading

This may appear funny to some people, but the
best way to learn forex trading is by teaching it to
others. That is the best way to explain your own
trading strategy to yourself, and it will also allow
you to fine-tune your trading definition and to
uncover black spots in your strategy. Your
students will challenge you by asking good and
tough questions, and you will need to have good
knowledge to provide them with great answers.

The effect teaching will have on your forex trading

career will surprise you, because it will help build
your confidence, and you will have more eyes
monitoring you. It will help you build your own

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team, group, or community where your trading
values are its foundation.

It will allow you to develop a more elaborate and

deeper understanding of your own forex trading.
Success in forex trading comes from having the
right mindset to handle pressure and temptation
while remaining disciplined consistently while
trading on the market.

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 Secret #15: Create your own powerful
Trading Strategy that combines ALL the
assets you have... so that you can
quickly make money on any opportunity
that market gives you!

Congratulations! If you made this far you are one

most informed trader out there! I am convinced
that 90% of traders don’t know half of the
information that you just read (that is why 90% of
traders lose). In these 14 secrets we showed to you
how online trading actually works! As you saw –
we didn’t show you some magic indicators or
insider information that could help you to
somehow forecast markets for next 3 years! It
simply doesn’t happen that way!

Instead of that we showed what is really important

– ability to make strategy that doesn’t rely on
forecasts but focus price movement and
maximizing that movement; importance of
positive expectancy, right money management
and ability to think in terms of risks/rewards; what
are best markets to trade; ability to wrap it all
together in one tradable system that has simple

136
and straightforward rules that will allow you to
follow trends and few simple mental hacks for you
to stay focused!

You can look at every trader that has consistently

made money in trading and you will that every
one of them employs these rules! Read Jack
Schwager legendary book “Market Wizards” and
you will see for yourself. Many of today’s top hedge
fund billionaires started their trading this way –
Bruce Kovner, Paul Tudor Jones, Stanley
Druckenmiller and many others could attribute
their trading success to these exact secrets you
just read!

If you are beginner this whole information might

be a bit more overwhelming, but rest ashore this
will be more than useful. Read it several times and
do your best to implement this to real trading
environment. But if you want to trade straight
away – we have something for you!

We have already made trading strategies that is

built on these trading secrets! In fact they are very
same strategies that I have traded so I know they
WORK! I have developed them in such way that

137
they doesn’t require more than one hour per day
and all you have to do is to follow their rules! You
will know exactly which markets to trade; when to
buy and sell; how much should your risk per trade;
when to cover your losses and when to take your
profits. Only thing you will have to do is to follow
the rules, stay focused and wait for your money to
flow! Here is detailed information!

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