Lessons from the Pros


Why Is This So Hard?

As my involvement in the financial markets has grown over the years, I realized that so many people love the idea of trading, yet they completely dislike the reality itself. While there are many attractive benefits to trading the financial markets, like having more time to yourself and your family and loved ones and being able to control and dictate your own salary, there are also many downsides as well. As is often the case, most people enter the world of trading currencies with a sense of enthusiasm that is unparalleled. They soak up as much information as they can, read as many books as they can handle, and dedicate many hours of spare time looking at the charts. Without question, everybody comes to the markets with commitment, because why wouldn’t they? If you can nail trading, you get to control your own financial future and who out there doesn’t like the idea of that? Yet for all that enthusiasm and energy, for so many it still ends the way that they don’t want it to.

Please don’t think for a second that I’m trying to paint a depressing or bleak picture here. The statements I am making are pretty much widely known across the industry. If trading is easy wouldn’t everybody do it? Trading currency markets requires skill, education, discipline, patience and effort.  You need to learn all aspects of the role, develop your skills, structure your day and stick to your plan.

However even with the right education and support, trading can still be a huge struggle for many people. What is it about trading that makes it such a challenge? After giving this some thought, I decided that I would share my take on this with you and see if it’s something that you can relate to if you have been having a tough time in the market up until now. Trust me you’re not alone. I’ve been there myself, and I’d be a liar if I said I don’t find the market a little grating on occasions still to this day!

If I was to summarize the trader’s role, it would come down to a number of fundamental aspects: The trader has to be able to make decisions during conditions of uncertainty and risk exposure. Think about this statement for a second. We have to be able to make decisions which could cost us money or make us money, during conditions of uncertainty and when there is risk at stake. Isn’t that tough enough? When you combine this with the fact that there is an intense flow of information and data being thrown at us when the market is open and we are aware of the different consequences which could affect us after decisions have been made, rounded off with a limited time to make those decisions, is it really any wonder why many people struggle with this? In a nutshell, the thing that differentiates trading so much from everything else is the intense level of uncertainty that goes hand-in-hand with a trader’s daily routine.

Over the years scientific studies have actually proven on a psychological level most people prefer comfort and safety over risk-taking. Again as I stated earlier in the article, most people like the idea of trading more than the actual doing of it and it is a far greater challenge because of people’s appetite or should I say lack of appetite for risk. Put more simply, why don’t we look at it like this:


Risk + Money + Uncertainty = Difficult Decisions


To achieve our goals in trading, we all need to accept that it is vital to embrace risk and the factors of uncertainty that the markets provide. They are the foundation of the world of trading. To overcome these hurdles we need a strict, simple and rule-based strategy which allows us to take action and define opportunities objectively. By embracing this activity, we have the ability to take our emotions out of making the decisions when we see a buying or selling opportunity in front of us. Once the trade plan has been written, the rules of engagement for the market have been clearly defined and our routine established, we then need to understand how we feel about risk and the uncertainty that the market presents to us every single day. The real question is, how do you feel about uncertainty?

While the routine of executing a trading strategy can be quite boring, on the other hand trading can also be incredibly engaging because it is unpredictable and uncertainty is a fundamental part of the market. This doesn’t mean uncertainty is a bad thing. We just need to understand how we are going to deal with it. Of course it would be nice to be able to guarantee our results but in the reality of the real world we know that this will never be possible. What guarantees do we have in life in any area? All we can do is stick to the plan, use rule-based logic and keep our emotions in check. It’s how we handle the emotions generated by uncertainty which will be the deciding factor in our success or failure.

This is an incredibly complex topic and one which is far beyond the scope of this article. In my ninth year as a Trader, I’ve learnt to really appreciate the psychological nature of the game. I’ve done everything in my power to study and understand the mental processes behind the decision making process involved in FX trading. We all need to do ourselves a favor and respect and appreciate the fact that uncertainty and risk not never go away. They are the two main reasons why most people find trading so difficult. Therefore once you have got yourself a solid rule-based strategy and you know how to read a chart objectively, is it not down to just learning to love the uncertainty and risk which goes hand-in-hand with the trading process? At the end of the day, the way you deal with not knowing what comes next is going to affect the long-term success that you may or may not have in your trading. My final piece of advice is this: learn to love the nature of trading. If you don’t then maybe it’s not the right path to be following at this stage in your life. But just remember this: What things in life are ever really for certain anyway?

Have a wonderful week,

Sam Evans



DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.