4 Tricks To Make A Long Term Commitment To Forex Trading And Finally Reap The Profits You Deserve
If you’ve read anything I’ve written about Forex trading over the years, you’ve probably noticed the focus is on the LONG TERM.
I say “long term”, “long haul” or “over time” a lot for a reason. Putting my money to work to make more money over time is what my trading is all about after all.
The goal of my Forex trading is to start at point A with a certain amount of money and end at point B with considerably more money… and the distance between point A and point B is years.
But I’m afraid some people might just brush over this concept.
Long term? Yea, yea, got it.
However, do they really get it? Do they understand how this concept is at the core of my success? I’m not 100% convinced.
Therefore, I want to hammer this point home.
Trading Forex Is About Wealth Building… Not Money Making
Look, I get it. We are here because we want to make money. We want to put our extra money to work to make MORE money.
And that is what we are going to do… over the long term.
When you are growing your money over the long term, it is wealth building. And what better way to build wealth than in a way that accumulates wealth faster than other investment methods?
I am in the process of systematically growing my trading accounts OVER TIME. I am not focused on making short term income I can take out of the market on a weekly or monthly basis.
But I have to admit, taking a long term view is harder than it sounds, especially in the beginning. Trading can be very emotional when you put real money at risk in the live markets. And evaluating your trading on a short term basis is only natural.
The good news is… it gets easier as time goes on.
As hard as it might be to NOT focus on the money in the beginning, the goal should be to trade long enough where your emotional triggers to trading subsides… which can only happen with experience and time.
I am at the point where I am so confident in my trading approach, strategy and ability to trade the strategy properly that I do all my trading activities basically on autopilot.
- Trading every day at the same time is a habit.
- I just follow the rules and don’t dwell on what I “think” might be happening.
- I don’t pay any attention to world events or try to speculate on what is going to happen in the future.
- I don’t focus on the money made or lost, but rather how well I stick to the trading rules..
- I don’t stare at my charts hoping something will happen, because I understand I have no control over the markets.
Having this level of confidence is really important when running signals services like I do. I’m essentially trading in a fish bowl, where other people can see what I am doing… the good, the bad and the ugly.
The point is, trading is really in the background of my life. And that is where it should be if you want to last over the long term.
You’ve probably heard this before… Forex trading is a marathon, not a sprint.
And if you want to go the distance, you need to adopt a long term view and keep trading in the background of your lives, where it belongs.
Here are some “tricks” I use to maintain perspective and keep a long term view.
Focus On Building A Profit Buffer In The Beginning
In order to make real money trading Forex you need to make an investment into your trading account. And the money you start with has to come from some other income source. You had to “work” for it.
This is money you could have held in your hand, used to go on vacation or to buy a cup of coffee. It’s “real” and you had to do something to get it.
I don’t know what your relationship with money is. But for me, I’m attached to the money I’ve had to work for. And I definitely don’t want to lose it without getting anything in return.
So, when you are first starting out, the money you put at risk is YOUR money. And as such, it means a lot to you... which magnifies the emotions of losing trades.
But what happens once you start profiting on the account?
You’ve had some winning trades and now your account is larger than when you started. Now the money you are risking on the trade is not YOUR money, but the money you made through your trading activities.
I view this money as MARKET money. It does not become YOUR money until you take it out of your account and hold it in your hand (or these days have access to it in a way you can spend it).
And what I’ve found is I am not as attached to MARKET money. Of course, I don’t want to lose it either. But I’m not as emotionally attached to it.
Therefore, it is really important in the beginning of trading a new account to focus on creating a Profit Buffer. Basically, you need to dedicate yourself to trading long enough where you are risking MARKET money and not YOUR money.
Once you reach this point, the ups and downs of trading are less emotionally charged. And this lets you take a more relaxed view of trading and put it into the background of your life where it belongs. As a result, it is a lot easier to take a long term view of your trading activities.
Evaluate Your Forex Trading Success In Terms Of “Start” And “Finish”
Trading is hard psychologically. When you put your money at risk under live market conditions, there will be losses. And losing money doesn’t feel good.
And you are not going to do something that doesn’t feel good for very long.
Heck, even when you are in a winning trade it can be challenging. You don’t want to see this potential winner turn against you, do you? So, even when you are winning it can be stressful.
- If you look at your performance on a trade by trade basis… you’re going to suffer.
- If you look at your performance on a monthly basis… you’re going to get discouraged.
- Even if you look at your performance on a yearly basis… you might take a negative view that leads to prematurely abandon the trading.
In short, how you determine success really matters.
If you look at success in terms of weeks… you only feel successful if EACH and EVERY week is profitable. And every time you end with a profitable week, you reset your thinking and entering the stressful world of trying to be profitable AGAIN.
And if the next week turns out to not be profitable… you think you are failing and get disappointed. And frequent disappointment is just one step away from premature abandonment.
Basically, focusing on short periods of time makes it easy to lose perspective on how your trading and wealth accumulation is really going.
So, if you should not look at your performance on a trade by trade, monthly or even yearly basis… How should you look at your performance?
Do you have more money now than when you started?
If the answer is yes, you are probably doing the right thing and should not even consider abandoning the trading.
If you look at your performance in terms of pips, ask yourself, have I accumulated a positive pip number since the BEGINNING? If the answer is “yes”, you are probably on the right path.
Look, trading performance is not stable and consistent. Just because you made x amount of profit or pips one year does not mean you should expect that SAME amount the next year. Results will vary and some years will be better than others.
This is why you need to COMMIT, right now to trading for the long haul. If you never trade long enough to see with true perspective how your performance is moving in the right direction… you are always going to quit and start over from scratch.
I recommend evaluating your trading performance on a minimum 3 year basis, and ideally on a 5 year basis.
OK, but when looking at a 3-5 year period, what type of gains are we looking for?
Be Satisfied With 20% Average Yearly Gains
Before you start screaming…
Yes, I know we can do WAY better than 20% average yearly gains.
- Check Out Forex Signals Blast Off
- Check Out Forex Trading Blast Off
- Check Out Crypto Profits Blast Off
But here is the point.
If other investors are getting an average of 6% to 8% a year and would be overjoyed with 10% average yearly gains… Why would we be upset about TWICE that amount?
The average yearly gains over the past 90 years for the S&P 500 are around 10%. So, 10% a year is a nice benchmark.
And again, we are trading with the potential to GREATLY beat this benchmark.
Everything we do is to put ourselves in the position to accumulate wealth faster than other investment methods. So, just because we can do WAY better than 20% a year, doesn’t mean our expectations should be extraordinarily difficult to achieve.
Again, it is about striving for the highest gains possible, but keeping a long term perspective.
What would happen if you set the goal of 200% a year and one year you only get 80%? Are you going to stop trading in a way that produces 8 TIMES better results than the S&P 500 benchmark?
You’d be surprised at how many traders would say yes to that question because they lack perspective.
By making our goal easier to achieve and taking a longer term view, we are much more likely to stick to the trading. And only by sticking with the trading over the long term can you reap the benefits of potentially life-changing gains.
You see, even how we look at our performance can play a role in keeping us on the path to achieve our LONG TERM investing goals.
Be Aware Of That Little Voice In Your Head And Avoid Premature Abandonment
I’ve been doing this a long time, and have been involved in teaching a great deal of others. And I’ve noticed a dangerous tendency.
The tendency is to look for reasons to stop trading the strategy and look for something “better”.
People look for reasons to abandon trading. And if they look hard enough, they always find a reason.
- I had 2 losing trades in a row… the strategy must have stopped working.
- I wasn’t profitable this month… I guess I should trade in a different market.
- I haven’t had a big winner in a while… Maybe I need to day trade.
The path to your profit goals is NOT a straight line. You are not going to invest some money and trade it straight upwards to your financial goals. There will be a combination of growth, consolidation and loss.
If every time you think you are not getting the profits you deserve and look to start over doing something else… you reset your opportunity for failure.
That little voice in your head tells you to stop doing what you are doing and do something else. Because that little voice just “knows” that the other thing is BETTER.
And most times, that other thing is not “better”. So, the little voice tells you to go back to what you were doing originally. And more often than not, you come back to the original strategy and see if you would have just stayed the course… you would have been way more profitable.
Again, it comes down to making a LONG TERM COMMITMENT.
If you prematurely abandon the trading, you forfeit all the potential future profits. And that is the worst thing you can do.
So, instead of looking for reasons to stop trading the strategy… focus on reasons to stick with the trading.
Focus on building a Profit Buffer, look at your performance in 3-5 year chunks and if the average gains are above 20% a year… stick with the trading. Period.
Your trading success is not determined by any one trade, or group of trades. Your trading success hinges on the culmination of a great many trades over a long period of time.
- Your journey starts when you fund your first account and start trading ONE thing in ONE way on that account.
- Your journey ends when you decide to stop trading that one thing in one way on that account.
If you have more money at the end of this process, you are a success story.
There is no way around it, reaching your financial goals (potentially way faster than other investment methods), takes a long term commitment. You are not going to reach your goals overnight… so stop evaluating your trading performance on short term results.
Settle in for the LONG TERM. Prepare for the LONG HAUL. And reach your financial goals OVER TIME.
I warned you I use these terms a lot.