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In this video:

Patrick Grimes:

Right. This is Patrick Grimes and I’m really excited to be here today with some awesome people to talk about a completely new alternative investing strategy we have not dug into to this level before.

Top trading strategies for passive investors. 

Two heavy hitters to talk about it. And that is top currency trading strategies for passive investors, also known as Forex. What is that? How does it work? What are the risks? We’re going to dig into all that today. How to be successful at it. Is it passive, is it not? These are all really cool things, and I’m excited to learn about it along with you. I haven’t done this, and this is one of the passion projects. This is my passion project here. This is our Alternative Investing Mastery series and put on by Passive Investing Mastery and myself.

And why are we doing this? We’re doing this because we want to educate investors to achieve mastery in the art of passive alternative investing strategies. So you keep your life back. You can be passive, but you get into alternatives. You’re just all about the stock market, this is not the right event for you or the right series for you because we’re about non-correlated investments outside of the stock market. Ones that don’t rise and fall together.

Now, we educate here. It’s important for us. I’m on over a hundred podcasts and books. I’ve written articles and forums and others. It’s all on my website. I actually give away a couple of bestselling books for free on our website, if you’re interested. I actually sign them and send them out, help inspire people along their journey. And we have this bi-weekly webinar series, which seems to have turned into a weekly webinar series, always featuring a Blue Ocean approach of different alternative strategies.

Now, we’re doing this because we believe financial security happens through a lot of different allocations into different markets, which can only be achieved into these very unique kind of novel alt strategies. And we want you to get to that point where you have true, not just independence, but security, and the abundance, the financial abundance you need for the causes you care about most. That’s our mission here. We do that through education and through sponsoring best-in-class alternative investments, which you can check it on our website.

The next event, before we go any further, make sure you jump in there, one week from today, Venture Capital for Passive Investors: Syndication Strategies That Works. I don’t do a lot of venture capital. It’s not really my bag, but a lot of people do. And a couple friends of mine that I’m in large, very large real estate deals with that have invested huge and were some partners in some of these deals. Isaac Bennett works for a venture capital firm. I’m in some Masterminds with him. And he is doing real estate and venture capital. Trey Taylor is a family office. He manages his own and all of his relatives, his extended family’s funds, and he also does angel and venture. So we’re going to talk about it. He’s going to be there as well. It’s going to be a fascinating conversation. Known both these guys for some time. And what are the different funding options and venture capital risk rewards? How to leverage syndications? What are angel investments and family office and high growth startups? What are these things that allow you to really build that true resilient portfolio?

So we’ll go through all of that today. But today, currency trading strategies. Really excited about this. So let’s go to our panelists right now. We have Andrew Mitchem. It’s tomorrow for him. He’s in New Zealand right now, so I appreciate you jumping across the pond virtually for us, Andrew.

Andrew Mitchem:

Lovely to be here, Patrick.

Patrick Grimes:

And by the way, Forex is not like real estate. It is global. You’re trading global currencies. So these educators is over 108 countries he’s trading in right now. It doesn’t matter where this expert is, if he’s somewhere on the planet Earth and he’s got something relevant to say for you and America about Forex trading. So he’s a full-time currency trader and investor since 2003, founder of the Forex Trading Coach, providing training to traders in over 108 countries. Pretty awesome. Developed a profitable trading system after initial challenges. I would love to hear more about that. Advocates for the flexibility and freedom offered by currency trading. Really excited to have you here, Andrew.

And on the other side of the Pacific Ocean, where I’m kind of sitting in the middle, is Steven Primo. Primo is the Oracle here I think on the call. Is it okay if I call you that, Primo?

Steven Primo:

That’s fine. Everyone calls me that as well. That’s fine.

Patrick Grimes:

Well, I’m glad, because it made sense. 48 years as of this year, he’s been trading. He has been trading for 48 years, starting in 1977 as a floor reporter on the Pacific Stock Exchange. Former stock exchange specialist for Donaldson, Lufkin & Jenrette, managing markets in over 50 stocks. Co-developer of the PTS Primo Charting Platform focused on trading education. Once again, perfect. Glad to have you here. Featured in Stocks & Commodities magazine, he’s contributor for contributor for TradingMarkets and the FX Street and Trader Expo. His proprietary methods for trading are used in over a hundred countries.

This is a global strategy. Couldn’t ask for a better group of guys. Let’s start with Andrew and then go to Steven, and I’d like to hear why are you excited to be here today educating us on currency trading strategies? Go ahead, Andrew.

Why I choose to trade the FX market. 

Andrew Mitchem:

Hey there, Patrick. Hi everybody. I’m here today because I absolutely love trading in Forex market, and it’s just completely changed my life over the last 20 years, and the more that I can help do that to other people, the better. It’s an awesome market to trade.

Patrick Grimes:

And Steven.

Steven Primo:

Hello everyone. Thanks for inviting me today. And similar to what Andrew said, I’ve been trading for 48 years, but roughly about 20 years ago I really wanted to start sharing what I had learned, because you can only go so far if you’re just sitting in a room trading by yourself, but to a point you have to share with other people and that extends your next level of trading. So I started teaching and I’m excited to teach people. It really is a lot. It gives you a lot more satisfaction than just sitting alone in a room trading by yourself.

Patrick Grimes:

All right. So here we go. We’re going to dive into the discussion, but first I want to make sure that we see have a lot of people here participating in the chat. David, Amital, Bill, Kenneth, Anise, thank you so much for already jumping in there and starting to participate. Keep your questions coming. We’re going to have lots of questions during this event, probably 40, 60. We’re going to answer questions as they’re relevant to the current topics that we’re talking about. I may punt on some questions and then towards the end when we reach those topics, weave those into the conversation. If we miss one, that’s our bad, but we’re going to go back through it after the 45-minute mark and go through a very laser-focused Q&A. Do our best to get through all of those questions. But keep them coming. We usually have 40 plus, 60 plus questions, so it’s a very lively discussion. Looking forward to this today.

So without any further ado, let’s jump into the discussion. So, what is currency trading? It’s what we’re going to start out with, and we’re going to break it down in very simple terms. I like to say that so that my grandmother’s knitting circle can understand. So let’s break that jargon down very simply. Andrew, what is currency trading? How does it work?

Andrew Mitchem:

Yeah, Patrick, so to break it down real simply, currency trading, when you trade currencies, you’re actually trading what’s called a pair. So you don’t just trade one stock or one thing, you trade something against something else. So as an example, the Euro/US Dollar. It’s traded as the Euro/US Dollar, as a currency pair. And when we look at it, we can either buy or sell that currency pair. So if the Euro/US Dollar looks like it’s moving up, effectively we’re looking at strength in the euro, weakness in the US dollar. If it looks like the Euro/US is falling, that means we’re effectively looking for selling euro and buying US dollar. So they’re all traded together as currency pairs.

There are eight main currencies that we look at, and that would be the Euro/US Dollar, Swiss franc, Canadian dollar, Australian dollar, New Zealand dollar, Japanese yen, and the British pound. So it makes it really easy because it’s mainly just eight currencies to look at.

Patrick Grimes:

So Yuan, the Chinese Yuan is not on that list.

Andrew Mitchem:

We do have those as well. But for people that are wanting to start this as something new, I would probably focus on those main eight currencies. They’re the most traded. The cost of doing the trading is very small in terms of the spread, the liquidity’s fantastic, and what we do when we start looking at technical trading, it has the highest reliability. Yes, you can trade the Mexican, the Swedish krona and lead on to other currencies and other markets, but I would focus for someone new especially on those main eight currencies.

Patrick Grimes:

Amital is saying, “What is Forex?”

Andrew Mitchem:

Yeah, so Forex is foreign exchange currencies. It’s just short for foreign exchange. It’s basically currency trading, Forex, it’s the same thing.

Patrick Grimes:

We wanted to call it currency trading instead of Forex, so it didn’t sound so foreign. And so it is, yeah, one and the same. Here, Steven, let’s hear your thoughts.

Steven Primo:

Yeah, I ditto exactly everything, the same thing Andrew said. The main thing is that the trading is actually simple, because I’ve noticed from my experience in trading currency pairs is that when they run, when they go in a certain direction, they really go. I mean, these are some of the best trending markets available. And since we feel that the best way to become a consistent trader is to be in sync with the trend, I think there’s a real advantage to trading currency pairs. If you’re able to find out through price behavior what the trend is and get on board, you can really have some nice gains and really have some nice profits.

Patrick Grimes:

So this is interesting to me. So I did some research in advance. About 24%, you talk about the pairs, 24% of the trades are between the euro and the US dollar. That’s fascinating. And I think it said 66% are in those nine most common currencies overall. So the majority of it is in those top currencies. So you’re really talking about trading between, call it nine or 10 different currencies for the majority of it, and then a quarter of that or the majority of that is actually the US dollar and the euro. Is that right?

Andrew Mitchem:

That would be exactly right. And that is exactly what I would focus on for those reasons, given the quality of the trade setups, the cost of doing it. It’s so much better just focusing on that. And the beauty of Forex trading is you don’t need to know about a hundred different companies or anything like that. It’s just eight currencies and what moves them. And as Steven said, the moves that you can get are huge.

The ability to Buy and Sell.    

The other beauty is you can of course buy and sell. So you’re not just buying something and kind of hoping it’s moving up. You can make exactly the same return by selling, let’s say the Euro/US Dollar and getting a profitable trade when that market falls as you can when you buy it. You just need to be on the right side of the market.

Steven Primo:

Right. And what we had talked about before in terms of keeping it simple, I think a lot of, especially beginners, can really get overwhelmed deciding what market to trade. The great thing about currency pairs, as we’ve stated, if you stick with those select numbers, those basic ones, it keeps it a lot simpler, especially when you’re learning how to do it. So you’re not going through 5,000 stocks or tons of crypto that you don’t understand where they are, you’re just focusing on this small number. It makes it lot easier to get involved.

Patrick Grimes:

So Anise here, who follows you, said that Primo makes it simple. A great educator. So David’s saying, “Share, baby, share.” So, very excited about that. And we’re hearing a little bit about Mitchem’s humble beginnings in the chat. So you guys have got a great following here, much more exposed to my audience than I originally understood. This is great.

So let’s talk about how active and passive is this, because this is actually a Passive and Alternative Investing Mastery strategy session. A lot of the investors are like myself. I was a hardworking professional, successful at what I did, I was good enough to be able do what I did to be able to make some money to be able to invest. But I’m busy on my day-today. So how do you talk to investors about evaluating the active and passive methods by which you go about investing in this? Why don’t we start with Steven?

Steven Primo:

My opinion is I don’t think everyone or traders should be one or the other. In other words, you shouldn’t be totally active in something involved and just staring at every PIP or tick. You shouldn’t be totally passive either. I teach my students that they should be actually involved and part of the process, because that’s how you’re going to really become consistent. I think no two traders should ever trade alike. Some traders have a larger account. Some are new. Some have been trading 30 years. Everyone has different risk parameters. So that will determine how active you are, how passive you are. Another determination is thinking of what timeframe. If you’re going to be intraday trading, you have to be a lot more actively involved as opposed to someone who’s looking at weekly or monthly bars and you can pretty much set your parameters and then sit back and watch. So it all depends.

The first step I believe that traders and students of mine have to make is you have to determine what type of trader you are. Are you the type that wants 20 trades a day or you want one trade every couple of months? And then you can decide how active or how passive you should be. But I don’t think it should be a hundred percent one side or the other. That’s just my philosophy.

Patrick Grimes:

Andrew, you have a take on that?

How much time do you need to trade daily?

Andrew Mitchem:

Yeah, sure. Look, I completely agree with Steven. The beauty of currency trading is we have the option to look at various timeframe charts. And the way that I believe that we both trade, myself and Steven, is it kind of doesn’t matter what currency pair we’re trading and what time frame chart.

So to talk about how much time you need. I always say to people, once you know what you’re doing, you could quite easily trade in 30 minutes a day, probably less. But also, you could trade on weekly charts or monthly charts like Steven said, and just look at your charts once or twice a week or a month. It depends what you want to do. But I still think you need to have some involvement in what’s happening. You can’t just sort of put something on and then forget about it. I still think while you’re learning, especially, you need to understand how the market works, what you’re looking for in terms of price action and candle patterns. But it certainly isn’t something that you get that perception online that you have to be there at certain times of the day, where you have to sit watching every PIP of movement, like Steven said. A lot of people start like that and they fall into the trap of doing that because people think that you have to trade more to do well. The reality is trading less is better and just having higher quality trade setups.

Patrick Grimes:

So when it comes to passive investing, it’s either you’re just, like you pointed out, you need to be active. So you don’t want to just buy something and forget about it, right? You’re not necessarily going to be a long-term holder when it comes to just a Forex investment is kind of what I’m hearing.

The other way investors can be passive, and I’d love to dig into this a little bit because I know somebody who I rub shoulders with occasionally and they put together a Forex trading strategy. And when I think the Japanese, it was the Japanese bond inverted and that it caused a big challenge for their strategy. Their strategy was a bot, it was the way to make it passive, and they lost some money. They lost some money for two reasons, one was because it was leveraged and two was because it actually traded negatively into kind of a down cycle on the end.

And I guess these algorithmic tradings, the strategies, they kind of account for 70% of the daily trading volume. And daily trading volume is massive. And then there’s a bunch of them that are using these bots and some are using AI bots now. And I’m actually… These people are out there AI trading Bitcoin right now as well. But let’s hear your guys’ thoughts on these algorithmic trading methods, these bots, these ways that people are trying to make these things passive, hear what your thoughts on that.

Steven Primo:

Well, right off the bat, I can tell you I’m totally against it, and it’s only because… I mean, a lot of people think I’m old school because I’ve been trading so long, but as I stated earlier, you have to be a part of the process. I think one of the main reasons why traders fail in any market, currency pair, if you’re an investor or whatever, is when you take yourself out of the game. Now that can be either having a fund where someone does it for you or relying too much on an indicator telling you whether to buy or sell, but you have to be a part of the process. And so I’ve had a number of students I’ve educated before that said, “Well, why don’t you just have algorithmic trading or just something just spits out buys and sells.” It goes against my philosophy where you would not be a part of the process. It’s just something that I’ve learned through the years.

And to tell you the truth, when I left the floor, I was hired to manage money and also to teach systematic trading at a number of firms. And I taught these systems, which were very similar to what’s going on now with AI, but they were all systematic. You just had to put in the numbers and they spit out the buy and sells. And they had fantastic research going back 10, 20 years, 80% wins. It was just unbelievable the different markets. And then when 2008 hit, they all crashed. Everything went down. And what happened to all the research? What happened to all the great 10, 20 years of fantastic numbers? It all goes out the window. So it was because you have to make adjustments. You have to be able to go with the ebb and flow of the market. And that involves what we were talking about. It can’t be just passive. You have to be a part of the process.

Andrew Mitchem:

Yeah, absolutely.

Patrick Grimes:

So you taught algorithmic trading, sorry, but you are no longer a believer in it after the 2008 because you feel like you actually need to be there having that human judgment, seeing something like in 2008 and interfering with the algorithms. Right? Is that what I’m hearing?

Steven Primo:

Exactly. The simplest way I could say is that I’m not even a big football fan, but I know in football, the quarterback can come up in a line of scrimmage and have a play already and everyone knows what the play is, but then he sees that the defense has shifted. It’s different. So he’ll yell out what’s called an audible, telling the rest of the team that we’re kind of changing and editing things a bit because the defense has shifted, so the play won’t be able to run the original way. It’s no different when trading. You see that, wow, you have to be a part of the process because maybe there’s more volatility today. Maybe there’s no volatility today. Maybe your risk is larger. Maybe it’s less. So you’d be able to change ebb and flow with what the market’s showing you.

Patrick Grimes:

We’re addressing some of Bill’s questions here about how do you know what moves around in the currencies. And also Michael, “Is it manual or algorithmic?” It sounds like it’s a little bit of a combination between the two, but you’ve got to be ready to do the audible. The engineer in me really struggles with this, because I was an automation and robotics engineer and I think of things as systems and processes, but having that human audible is necessary and why we don’t have robots everywhere on every manufacturing floor right now. Andrew, let’s hear your thoughts.

Andrew Mitchem:

I couldn’t agree more with what Steven said. Maybe we’re both old school, but I think he’s absolutely right, and I can tell you from a of personal experience that I’ve tried every bit of AI, every trading robot, every algorithm there ever was, bought them, tried to create them, and they just don’t work. I think a lot of people run into that pitfall of they see something that has been back-tested that looks really good in hindsight and it goes live and it just doesn’t work.

I really cannot stress enough from personal experience how much human common sense and seeing something and reacting to it will massively help you not only in your results but also in that actual knowledge that you have of being able to do this for yourself. Whereas even if you had a system that you got from somebody, how do you know when that stops working if you don’t have that knowledge of how the markets work? How do you know when the market’s changed and you need to adjust the parameters? Just buying something, leaving it to run with your money, your hard-earned money sat there, it’s a huge gamble. And I personally, I love the fact that I have the knowledge of what to do, when to do it or when not to do it.

Steven Primo:

That system usually stops working the minute we start trading it. That’s when it usually stops working.

Andrew Mitchem:

Really. And we’ve all done it. So the issue is that people see online and YouTube and other play TikTok and things that all these [inaudible 00:22:07]. Because someone’s generally trying to sell something, and I promise you it doesn’t work.

Steven Primo:

Right.

Patrick Grimes:

Let’s talk about this… Give me a [inaudible 00:22:20]. So it sounds like it’s a lot of book smart, or there’s a book smart component to it, then there’s a street smart component to it, and then there’s the science and technique, and then there’s the art. Are we talking it is the arts the audible, is it 50% art or is it 10% art and 90% algorithm and science and technique here? What do you guys think?

Steven Primo:

Well, for me personally, I put about 25 to 30% rule-based pattern recognition or just looking at price behavior. And it’s rule-based. It’s not systematic. And then I would put basically… Or I should say, I’m sorry, sorry everyone. I mean 70% rule-based. And then 30% I leave for intuition, for experience, for audibles calling, being part of the process. So 70% rule-based and 30% I leave for making my own process and decisions.

Patrick Grimes:

I love how you could answer that question. Andrew, what are your thoughts?

Andrew Mitchem:

If I had to go first, I would’ve said exactly the same. This is quite spooky. Because it’s the way that I suppose that over years, you have trial and error and you figure out what works. And yes, when I see a trade setup, I have rules for my entry and exit levels based on the way that I trade, but there is certainly a little bit of discretion in what I look at on the charts as well. But it’s like anything, it’s like any skill that once you can do it, you can kind of do it. It’s like watching a kid ride a bicycle. It’s very complicated to start with and then when you know how to do it, you just jump on the bicycle and go. And I believe that kind of art form of trading is very, very similar. You have things you have to do and then you have other things that you kind of just get over time.

Patrick Grimes:

The art form of trading, right? And we like to say the mastery in the art of passive alternative investing here. And so there’s an art to it. So let’s dig in a little bit more. What are the actual ways that people would engage? I’d say you’ve got to go learn something, you’ve got to go educate yourself, and then you’ve got to go practice. And again, the education, you’ve got 70% rule-based, you got to practice to get the 30% intuition. You got to be out in the field actually doing this.

Why so many retail traders lose money.

How have you investors learn, how long does it take to actually gain the confidence necessary that you see for them to be successful at this? I mean, I’ve seen some numbers out there. We were Googling around trying to figure out, it says between 72 and 84% of online Forex traders lose money.

Andrew Mitchem:

It’s higher.

Steven Primo:

I was going to say same thing. I think it’s higher.

Patrick Grimes:

And 29% of retail Forex traders achieve capital gains, meaning they actually get a gain. So those are not numbers that I’m typically seeing in real estate investments. So help us understand how do you educate to beat those numbers, to beat those statistics, to get over that book knowledge, rule intake, and then to learn the art for your students to be successful. What’s that process?

Steven Primo:

I’ll let you go, Andrew.

Andrew Mitchem:

Okay, so for me it’s finding a strategy that suits you as an individual person. That’s what it comes down to. And look, it took me four years of going round in circles and buying things and beating my head against a brick wall. I’m not a sort of person that gives up, but I kind of got very close. For me personally, I then realized that the system that I had to trade meant I wasn’t looking at charts all day, and I had to actually have some logic behind it. Because when you start as a new trader, you can get demo accounts, like free virtual money accounts. And the downside is that people get inundated with indicators and all these lines crossing over everywhere and arrows and dots and things. It looks really cool, but the trouble is they fail to look at what’s actually happening in the price and they fail to understand the things that the big players look at, like support and resistance and news events and things like that.

And so for me it’s about someone needs to use the demo account, treat it like it’s real money. The danger is they’re going to start off with a 100,000 demo account and they go, “Fantastic. I’m making all this money,” by just guessing what they’re doing. And of course, when you go live, you’re probably unlikely to go to a hundred grand live account. So I tell people to start with maybe a 10,000 demo. Treat it like it’s real. Make the mistakes that you’re going to have with your risk management going wrong and your lot sizes incorrect and things like that, that everybody will do. But treat it like it’s real and develop a strategy and a system that you understand that you have confidence in, that you trade professionally on a demo account before you even think about going live.

Patrick Grimes:

Is that a year? How long-

Andrew Mitchem:

It could be. It could be. If you’re doing it for yourself with no help, absolutely. Like I said, I took four years. And it’s very tempting to get to those stages where you go, “Oh, this is not working,” so you try to reinvent the wheel again or you buy another indicator or robot, like I just talked about, and you’re kind of very easy to get distracted in today’s world online. So it’s about stripping all that down from… If you’re doing it yourself, if you’re doing it yourself from scratch, it’s about picking the best of different things and working out what’s going to suit you as an individual person.

Patrick Grimes:

Steven, let’s hear your approach. It’s a great answer, Andrew. How do people get in there in this world where the majority of people are losing money? They want to get into this asset class, they know they need to educate themselves not only just on the books and the rules, but they got to build that intuition, they got to get that art of it down to make those audibles. How does somebody just starting out get in there and how long does it take them before they could go live and actually start winning?

Steven Primo:

Well, I believe that that statistic is actually higher. I believe upwards of 85 to 90% of all first-time traders lose money, and when they say lose, it means that they actually lose everything, not just to have a bad month. They give all their little nest egg away. So I remember myself when I first started trading on the floor, I had a terrible time. For the first year and a half, I couldn’t make a dime. And I was lucky to have some mentors who saw what I was doing, and I remember what they said. They said, “Steve, your trading just is far too complicated. You have too many indicators, you’re watching far too many things, you’re in too many systems, everything.” And then they said it’s the easiest thing in the world to over-complicate your trading, but it’s the most difficult thing in the world to simplify it.

But once I started to simplify things, that’s when I started to become consistent little by little. So I think regardless if you’ve been trading 20 years, 30 years, 50 years or a couple of weeks, you have to keep it simple.

Now, having said that, I think you have to find a good mentor or a good teacher, Andrew I think would be perfect. Just listening to him, he’s the type of person I would want to go to if I was trying to learn how to trade Forex. And you want to take everything from them but also get your hands on everything, books, periodicals. And then you have to practice. There isn’t any other profession in the world where you don’t have some form of practice or paper training. Think of an athlete. They have a practice before the game or even they have the sessions before the actual season starts. An actor has rehearsals. It’s the same way with trading.

I liked, in fact, I loved Andrew’s idea of instead of using the $100,000 demo account, which I know everyone does, I’ve done before in the past, you start with a 5 or 10,000. That’s a great idea. Start with that, because that’s closer to reality, what you’ll be doing. And the thing is I tell my students, “Ask me questions. Whatever you want and whenever you want. And when you finally get to the point where you stop asking questions, that’s when you can start actually trading with real capital but keep it as small as possible.” So with some people it’s maybe takes a couple of weeks to get to that point. Other it may take six months or a year. It’s different for everyone.

Patrick Grimes:

This is great. And what’s the payoff? The payoff of actually getting good at this is huge, right? Because people are making money in it. The industry has grown 432% between 2019. That’s huge. Right now in the US alone it’s 1.9 trillion daily average turnover. So there’s a lot of trading going on daily. And I think somebody threw in the chat here that there’s 6 trillion per day overall in Forex. I don’t know that one, but we’re talking like… And then I saw some other numbers that professional Forex traders typically achieve monthly returns ranging in five to 15%. Now is that what you hear? Because those numbers seem mind-blowing. And monthly returns, and that annualized. To be really good at what you… Once you can get at this, you’re a couple of years in, you’ve done this, we’ve gone through, had a mentor, you’ve got good at it. Answering the questions. We got a couple questions from Anise, Robert, Michael. What are these returns? What’s the payoff? What’s the expectations that people should think about for a Forex trading?

Andrew Mitchem:

Well, Patrick, I knew you were probably going to ask that question or somebody was, and you probably can’t see it in front of here on my camera, but I’ve said on here, I’ve written it down just to make sure that I quoted this right, and I said, of course it depends on your risk. How much risk you take depends on your return. But we are massive advocates of incredibly low risk for trade.

But considering that, we would like to suggest that you’re probably, once you know what you’re doing, going to make between 5 and 10% return per month on your account. Just last week we had a 3.6% gain. We’re going to do 3.6 gain in the week, but I’m trading only a quarter of 1% of my account risk for trades. A really, really tiny risk. So a very low drawdowns. Are we going to do 3.6% every single week? No, we’re not. Some weeks will be more, some will be less of course. But I’d very confidently say that once you know what you’re doing, with very low risk for trade, there’s no reason why you can’t make 5 to 10% on average per month.

Patrick Grimes:

So let me just understand. So you said hypothetically you have a hundred grand in your account, you said you’re only trading maybe three grand of it, and then of that three grand, you got a 3% on one year, or what was that? What was the numbers? You’re not trading it all all the time.

Andrew Mitchem:

No, no, no. So if you’re on a $100,000 account and you’re on a 0.25% risk per trade, the most I’m risking is $250 on a trade on a 100,000 account. Very, very tiny. That’s just me personally because I trade on things called prop firms as well. I said to my clients I would never risk more than half of 1%, so a $500 risk on a $100,000 account. Per trade.

Patrick Grimes:

Per trade, and that trade is once a week?

Andrew Mitchem:

So if a trade goes against me, I lose half of 1% of my account size.

Patrick Grimes:

Okay, got it.

Steven Primo:

I have to commend you, Andrew, because I usually am 1%. But wow, a quarter. That’s amazing. That’s great.

Patrick Grimes:

And you’re getting 5 to 10%.

Andrew Mitchem:

Well, I think keeping your drawdowns low is key.

Steven Primo:

I’m sorry?

Andrew Mitchem:

I think keeping your drawdowns low is key in trading in currencies, because there’s two things that, like probably with all the people you deal with, Patrick, is your head and your heart and you have to control, because it’s emotions and it’s money. So I like to say to people, get those two under control. How are you going to do that? Have a strategy that you have confidence in, but also make sure that your losses are very small, but when you have gains they are several times your risk.

Patrick Grimes:

So we’re answering Kenneth’s question here about the returns and the risks and how that is. So you did say, and the audio is a little bit hard for me to hear sometimes, Andrew, so 5 to 10%, is that right? You said? And that was-

Andrew Mitchem:

Between 5 and 10% on that per month.

Patrick Grimes:

Per month. Oh my gosh. So the statistic I saw was monthly 5 to 15 and my mind was blown. You’re actually saying you’re seeing, a seasoned investor, you’re getting 5 to 10, and of course there’s a huge bit of volatility, but you’re also able to mitigate your downside risk to a quarter of a percent. And I just heard Steven say he’s doing 1%. Steven, let’s hear your take on what would people, they’re out there, they’ve been doing this a while, what do you think is reasonable under your tutelage, your guidance after they’ve gotten good at this to be able to achieve in terms of returns?

Steven Primo:

Well see, my take is a little bit different. I don’t feel that you can quantify it by saying this is what you can averagely make, what a student can make after trading for so long or learning. I think everyone’s different. I have some students that have been trading and students of mine for a couple of years and they make phenomenal, and other students in the same courses are basically breaking even, and then there’s others that are making 20 or 30%. Everyone comes in with different parameters. And there’s nothing wrong with that.

I really think what we try to do as traders, we try to make trading into a nine to five job. Like, okay, well if I get this, I’ll make 60 grand a month, or if I take this job and learn this skill, I’ll make a 100,000. Trading is not like that. Trading results are directly proportioned to how much work you put in, what you’re controlling with your risk, what your account is, and how much you use that 30% of intuitive reaction. So I don’t think you can… I always tell my students it’s not the type of thing where you say, “I’m going to make $500 a week.” You can’t do that. Because what happens if one week you don’t make 500? Well then the next week you have to make 1,000 to get back on track. And then if you lose 300 that week, then you’re really in the hole. Then you really dug yourself lower, and mentally, psychologically, you really dug yourself a hole.

So I think the best thing to do, the best thing a trader could do is, once again, practice and learn. And being able to trade another day is the best result you can get. That’s what you want. Because so many traders, that 80, 95% level, wherever, they’re gone. They can’t come back anymore. So you just want to be able to come back again, because that will ensure longevity. And in my opinion, longevity is really success.

Patrick Grimes:

Correct, and we talk about that a lot, capital preservation and keeping your risk low. And what we talk about is if you invest $100 and you lose half, you’ve only got 50 left. It takes a hundred percent return on that to get to break even. But if you lose all of it. It’s an infinite return required to get back to your 100. It’s impossible. It’s asymptotic the more you lose. And so you may be out of the game. That’s what Steven’s talking about. Live to go another day. Don’t risk it all.

That actually brings me back to what I haven’t heard you say, and that’s leverage. One of the things that freaks me out about Forex and Bitcoin trading and everything, the reason why I don’t get involved, because I’m actually a lot about low leverage. 2009 I was highly leveraged on a pre-development and I lost my ass when that market took a swing and it dragged me through the coals for years. I learned a lot about leverage. In Forex, they’ll do sometimes a hundred to one. That means you put $1 in and now you’re trading $100. And that could collapse you much more than your principal. Tell me a little bit about how you guys think about leverage, and these are just these frightening numbers to me, and why I should be a little more comfortable with it, with Forex trading.

Andrew Mitchem:

Because I’m outside the US, you have a lot more restrictions over there with your brokers, but outside the US, you can trade up to 400 to one. I’ve always traded at 100 to one, personally. It makes no difference to me. Leverage is a double-edged sword, of course. It can be your friend or it can kill you, depending on if you don’t know what you’re doing and if your risk is not sensible. But if you keep your risk very low, the leverage isn’t really an issue for me. I’ve never had a… Because I’m only risking a certain percentage per trade, it doesn’t matter what the trade is, what the direction, what the currency is, what the timeframe, what the size of the stop-loss is. To me that becomes irrelevant. I look at patterns and candle patterns, which we could potentially talk about later. So every trade has the same low and known and equal risk.

Patrick Grimes:

Yep. Wow.

Andrew Mitchem:

Because I don’t have lots and lots of trades open, the leverage is never an issue.

Steven Primo:

Once again, we’re on the same length. Because we’ve been trading this long, you start to see what works and what doesn’t and what you should put your attention on and what you shouldn’t. He’s been trading… I think when you get past the twenty-year mark, you start to see what’s of importance and what’s not. And leverage makes absolutely no difference to me because I know I’m only risking 1% of my capital. That’s all I care about. So it doesn’t matter if I have a thousand to one or two to one, if I’m risking 1%, $100 or something, that’s it. That’s all I’m concerned about.

Andrew Mitchem:

One other thing to add to the last question, if I can. You talked about, it kind of brings on from the leverage, you’ve got to trade when the market conditions are right, like anything. Sometimes there’ll be fantastic conditions and you’ll see quite a number of trades. You’ve also got to know when to not use that leverage and don’t kill yourself by doing silly things. If the market’s not showing you the trades, don’t trade. There’s nothing wrong with not trading. Sometimes that’s the best thing to do.

Steven Primo:

It’s true.

Patrick Grimes:

Okay, so we’re getting to that point where we’re actually at the 45-minute mark. Maybe we weaved in about half the questions here. We’ve got about 30 questions to do during the Q&A. Perhaps you can start out, let’s just do a final question of what’s the best advice that you can give an investor that has no idea what Forex trading is, but they’re interested, they’re attracted to it, they want to learn, they want to get involved. What’s the best way to get started in the game? And how do you make sure that you would guide them of saying not losing money and making sure that they’re going to be successful in the long run? Why don’t we go Andrew and then Steven. Then after that, we’re going to have you guys tell everybody how they get ahold of you, reach you, and then we’ll go to the Q&A.

Do you want to invest in your trading education?

Andrew Mitchem:

Okay, so if you’re brand new, you’ve got to make that decision on whether you want to do this alone or whether you want to do this as part of a group. That’s really what it comes down to. Do you want to spend a lot of time developing something? Do you want to potentially pay someone to get something that’s kind of proven? I think having a community is massive. Doing it by yourself, like Steven said at the very beginning, it gets incredibly lonely. No one to bounce ideas off. Try not to get caught up in the whole social media hype. Try to avoid all the flashy indicators that the brokers will have on their platforms. Get on a demo. Make it real. Treat it like it’s real money. Treat it like a business. Your 10 grand account, pretend it’s a million dollar account, just treat it like it’s real.

Yes, you’ll make mistakes, but don’t gamble. If you’ve got a gambling mentality and if you’re focused on how much money you’re going to make or give up your job tomorrow or next week, don’t do it. Learn the system. Learn how to trade properly, learn the theory, the strategy, the method of doing it, and if you do that properly, the money will follow later. It’s just going to take you a bit of time, but it will follow if you take the time to do your homework first.

Steven Primo:

Great answer. I would say in the beginning there’s a lot of soul searching you have to do, especially if you’re a beginner. Because I can’t tell you how many students I’ve had that said, “I want to learn how to day trade. I think it’s amazing. I’ve heard this guy at a party that said he makes a 100,000 a month, he has 10 trades a day and it’s sexy and exciting.”

And then you go there, and I’ve taught them, okay, well, I’ll teach them some day trading strategies, and they can’t pull the trigger or else they just lose money. Because they’re not trading according to their persona.

Or else someone would say, “well, I’m an investor. I’m very tight with my money. I just want to invest.” And then they find it incredibly boring and they can’t just wait every month for one signal.

And the first thing you have to do is find out what type of a trader you are. Would you want to be in front of the market watching it all day long or do you want to just passively look at it once a week or something?

And then once you do that, like Andrew said, get your hands on everything. Look online, but don’t overcomplicate things. Just keep it simple. Paper trade. And the easiest thing I can tell students right now when you’re looking at Forex markets, or any market, doesn’t matter, is to look at a chart of anything. For example, I’m looking at the Euro/Dollar right now, a daily chart of the Euro/Dollar, and apply a 50 period moving average to it. That’s all you have to do. A 50 period moving average. And what we teach our students is when price is above, then that’s when you should have a buyer’s bias. When price is below, you’ll have a seller’s bias. It’s that simple. But that one little step will help you to become a consistent trader.

Now obviously you have to add some structure in the form of a strategy or some pattern or some signal, but just look at any chart you want, any timeframe, and that little technique will help you. It doesn’t cost anything and you can do that right now. For instance, right now the Euro/Dollar is pushing up against its 50 period moving average, which is suggesting it may want to go higher. So this is just something to help you see if you would like to learn how to trade this way. And it’s very simple, doesn’t cost anything, and you can do it right now.

Patrick Grimes:

Okay, so here’s the chance. You have two gurus here, one that’s nicknamed the Oracle. Let’s have you guys both, Andrew and then Steven, tell the audience how they can reach you. What do you have to offer? I think you both train and coach in this strategy. Do you have any free giveaways? Make sure you drop your information in the chat. We now have put up a slide with your contact information, the call to action web address that you gave us to give out. Make sure you screen capture that, take a picture of it, and drop it in the chat. Andrew and then Steven, go ahead.

Andrew Mitchem:

Yep. So I’ve been coaching for 16 years, Patrick. As we mentioned, we’ve got clients right around the world. And I just really encourage people if they have any interest to jump on the Masterclass that I have on there. It’s on demand, so it doesn’t matter where you live in the world. It’s only about 20 minutes long. I’ve got eBooks on my site. I’ve got calculators for risk calculators. But the first thing will be to jump on that Masterclass, have a look at it, see what we do. I share some trades on there, some very basics about trading, how we trade, how we teach. And then it’s up to the individual to decide if this is something that they want to pursue further or not.

Patrick Grimes:

Steven.

Steven Primo:

Okay, people can contact me at ProTraderStrategies.com. You see there underneath my name. That’s my sister site. Every week I give free webinars. I also talk about all the different courses and the different strategies I have. In fact, if you go there, I’m giving a free webinar tomorrow at 10:00 A.M. Pacific Time, and I’ll talk about a strategy, one of the first strategies I learned from my mentors that I continue to use to this day. And I’ll give you a couple of the entry rules to that tomorrow. And you can see, it doesn’t cost anything. You just go to our website and sign up there. And you can find out more about us.

And once again, I’ve been trading for 48 years, if you can believe it, and I’ve seen and traded just about everything imaginable under the sun, and so I know what works in terms of consistency and I know what doesn’t. That’s really all we teach, ways in which to become a consistent trader. We’re not promising the world. We’re not saying you’re going to retire in six months. But we’ll try to make you consistent or help you at least get started in the right direction. My teaching is extremely simple. It’s not complicated. In fact, we make it that way on purpose, so whether you’ve been trading 50 years or a couple of weeks, it makes absolutely no difference. So lots of great information. And as I said, we have a free webinar tomorrow. I’d love to see you there in the class.

Patrick Grimes:

Andrew, Steven, thank you so much. So we’re going to… Before we jump into the Q&A, if you don’t know who I am, it’s Patrick Grimes with Passive Investing Mastery. We not only put out education, but we also have investments. We have an income fund, which provides steady Eddie cash flow, predictable cash flow through notes, fixed income notes. We have 90 day, six month, and one year notes, 7, 8.5, and 10% in a diversified loan pool. It’s a pool of loans to commercial real estate. We also have class A and class B shares. Those give much higher cash flows and varying right along with the profitability of the fund and at 13, 14% since inception. So really strong cash flow. Opportunistic with high interest rates. At a time when the banks are pulling back, we’re able to get great loans on performing assets and profit from that.

Now, if the operator needs or wants out, we also have an acquisitions fund that’s taking advantage of the best commercial real estate buying opportunity of our lives in commercial real estate acquisitions. It’s a great opportunity to just pounce right now. And literally I lost everything in 2009 and 10 and I wasn’t able to win from that, but right now we are winning extraordinarily so from this downturn in commercial real estate. So jump on that.

We also do non-correlated investments outside of real estate. We’ve done energy before, and now we’re doing litigation finance, litigation funding, which is the process of profiting from lending to attorneys who are working under contingency and we get returns derived from the settlements, providing access to justice just like our debt fund provides access to housing for tenants. And so we do completely non-correlated legal industry, unrelated to Forex, real estate, the stock market. Completely uncorrelated to all those. Really strong, steady-state growth of the legal industry. We get to profit from those investments in litigation funding portfolio. So really excited about those.

I also have a book, if you guys want it and give away books. It’s an Amazon number one bestseller, Lessons From Thought Leaders. We’ve got some amazing people, Navy SEALs, Phil Collen, lead guitarist of Def Leppard, actual rock star, NFL, NBA players, investors, entrepreneurs in there. I tell my whole story. I lost it all. The rise and ebbs and flows through my high-tech career. How I built my single-family, struggled, traded it up to a larger multi, diversified, and then founded Passive Investing Mastery. It’s a really cool story. Hopefully it inspires you along your journey. I give it away. You can download the ebook and or you can get a hard copy. I sign it and we send it out. So I hope that that is a give back that we do to try and inspire people along into their alternative investing journey.

Just scan that barcode or go to our website, PassiveInvestingMastery.com/book and make sure you put the name of this series in the note, because we get a lot of random form fills. And unless I know where you came from, I’m not going to sign and send it out. So you should put something in there and we’ll get that to you.

Before we get to the Q&A, the very next event is on Venture Capital for Passive Investors: Syndication Strategies That Work. Two really great colleague friends, experienced guys that I’ve known and liked for some time, Trey Taylor, family office, as well as Isaac Bennett, works for a venture capital firm. And we’ve invested heavy in real estate together. But these guys are also out diversifying into venture capital. We’re going to learn a lot about that. It’s going to be educational for me and you.

But let’s dive into the Q&A. We need to be laser about this because as typically happens, we get way too many questions. I think we have some 50 questions. I think I was able to layer in about half of them, but what I’m going to do is I’m going to go to the top, and I ask that Steven and Andrew, if we could try and just be pretty laser with these and try and get through them so we don’t miss the chance to get all these questions answered as we go. A lot of great shout-outs to people that have been following these two individuals. A lot of really encouraging comments made about what was said. A lot of the traders on here just giving the thumbs up, Amital, Anise. A comment from Anise says, “Currency trading is often referred in futures markets. If I’m not wrong, Forex is referred to spot markets, but it’s essentially Forex Exchange. One currency pitted up against another.” Let’s hear your thoughts on that.

Steven Primo:

I personally… Once again, kind of going back to that leverage. So what? All I’m looking at is price movement. I really am not concerned about a title or what it’s based on. I’m really just looking at price and patterns and specific things in a strategy.

Andrew Mitchem:

Yep, absolutely.

Patrick Grimes:

Go ahead Andrew.

Andrew Mitchem:

Oh, sorry. Absolutely. You’re looking at the spot market, what the price is right now. Is there an opportunity to buy that pair, sell that pair? You could use something, like Steven said, with that 50 EMA. You could use things like strength and weakness. You could look at a monthly chart and that’s moving up. You can look at a daily chart and only look for buy trades. There’s all sorts of things you can do, but essentially we’re looking at the price. Is there an opportunity here or not? Move to the next chart.

Patrick Grimes:

And so with all the rise and fall of these, and it feels a lot like stock market trading to me. And so Kenneth asked the question a while back, “How does currency trading compare to investing in the stock market and in bonds?” Maybe you guys can address that a little bit.

Steven Primo:

I would think the only difference would be how much you’re risking. And remember, you’re in charge of your risk. So that would be the only difference. If there’s a lot of volatility, let’s say, in the stock market but there’s no volatility in the pair that you’re looking at, well then, that would be a difference because you’re probably less risked with the pair. But to me, the only difference is since I’m looking at patterns and different ways in which to view the trend, it’s really all about risk.

Andrew Mitchem:

I’ve never traded the stock market, so a little bit hard for me to answer that one. What I would say is, regardless of where you live in the world, the Forex market’s a twenty-four-hour-a-day market, so it makes it a lot easier. You don’t get big gaps and spikes like you potentially could in stocks. You can buy, you can sell. You don’t need to know a lot about different markets. You can just look at the eight currencies that we mentioned. You potentially, depending on your strategy, can now look at cryptos and indices, metals, commodities. It offers so many options. Once you know how to trade, you can trade.

Patrick Grimes:

Well. The fact that you can limit your risk is certainly appealing over the stock market because in this particular case you’re literally dialing your downside protection. Very interesting. “It sounds like a lot of work,” Donald said. And we talked about in the beginning you got to learn, you got to put in some time to learn the craft. But after while, you’ll be able to do this like a wizard. And the upside’s big. Once you get good on it, once you get over the statistics and over the hump, get properly trained, people do tend to make pretty strong returns.

We already addressed how do you mitigate risk and how we talked about indicators for currencies, Michael and Bill. We talked about algorithms versus manually, Michael. I think I wove all that in there. And there’s questions in here about, “Man, probably I am nearing retirement,” Gaines says, and I’m not really sure he wants to manage these investments, possibly due the learning curve. “Are there other fund managers I can invest with that will do this for me?”

Steven Primo:

I’m sure there are. I don’t know of any because I’m more of an educator. I’m not involved in the fund side, but perhaps Andrew knows more about that than I do.

Andrew Mitchem:

I would say exactly the same. They’re out there. You could look at copier services, you could do all sorts of things like follow what other people do. It depends I think if you want to do this for yourself or not. Yes, you could invest with other people, but I think the issue then comes down to if you want a hundred percent passive, great. If you want to learn a little bit, then you probably want to learn how to do it yourself.

Patrick Grimes:

Right. And there’s another one here about, “Is there a list somewhere where I can go,” from Robert, “and find good or safe brokers to start trading with?”

Steven Primo:

I would pick rather than say… I would pick with someone where they allow you to do it yourself, where you don’t want to pay for someone’s advice. Since educators like Andrew and myself are teaching you what to do, there’s no need to pay for a broker to tell you what to do. So in the beginning, especially, try and keep your commissions or a brokerage commission if there are any, sometimes they’re very minimal, as small as possible, because that also comes and plays into the risk. A of times I include my commission costs, that’s part of my 1%. So even though it’s very minimal, that’s all included. So it’s just another expense that you want to keep down as much as possible.

Andrew Mitchem:

Yeah, there’s heaps of good brokers out there. If the question’s specifically about what brokers are there, then I’ve got a list of brokers I personally used for years myself who I’d recommend. I would say that having a lot of clients in the US and staff member in the US that you are a little bit more limited in the US with which Forex brokers you can select. I can certainly give you a list of two or three that I hear are very good.

Patrick Grimes:

Reach out if you want to hear that. Andrew and Steven perhaps can get you going on that. There’s a comment here from David about Steven being on a cruise ship with that water level rising and falling as he’s talking.

Steven Primo:

Well, the way it’s raining over here in Los Angeles right now, I may be on a cruise ship pretty soon.

Patrick Grimes:

I hope your neighbor’s not chipping away at an ark right now.

Steven Primo:

Yeah.

Patrick Grimes:

So let’s see. We’ve covered a lot of these. “The market can be a beast at times.” That’s true, right? Comment related to investing in the right times. Bill, we talked about algorithms, black swan events a little bit, and we talked about the 2008 and how the algorithms didn’t work out so well. And audibles, I think we covered that. If we didn’t, please place additional questions below. Kenneth asked about how inflation and interest rates impact foreign currencies. What are you going to… And I’ll add to that, how do you see shifts in this new administration affecting foreign currencies?

Steven Primo:

Go ahead, Andrew.

Andrew Mitchem:

For me, it doesn’t really matter any political event, anything like that, and any news event doesn’t matter because I’m only trading what I’m seeing on the charts. So I can have personal thoughts of what’s happening in different currencies, different countries, interest rates, employment figures, all that, but I still look at what’s happening on the chart. And why do I do that? It’s because what’s really happening in the market. The danger is you could see your monthly non-farm employment change figure, and you could go, okay, we’re expecting, pick a figure, 200,000 jobs and it comes out as 250. We could go, wow, it’s fantastic. It’s better than we thought. But last month may have been dropped down. So news trading to me is always tricky. Fundamental trading is tricky. Look at the charts. They tell you what’s really happening.

Steven Primo:

Yeah, I stopped looking at news over four decades ago and I’m living proof that you really don’t need it. I mean, I’m not telling you to not look at it if you feel you need that, but there’s really no need if you know what you’re doing. I’m not getting back to stocks to take away from currency pairs, but a perfect example is that if you looked with that 50 period moving average back in 2008, a weekly chart of the S&P price was below the 50 period moving average for consecutive days. This was in 2007. So just looking at that, that information alone would’ve told you there’s negativity in the market prior to all the fundamental news that came out later on. So the price really tells you many times in advance just to keep it simple. So sure, if you want to look at news, I personally haven’t looked at any news in almost five decades.

Patrick Grimes:

There’s a couple of questions in here. Well, David made a comment that, “After 15 years of trading, one thing I have learned is the most is what not to do.” So there’s other questions in here.

I think we’ve mostly answered about the expertise needed, Michael, to be successful. I think I drilled in. I actually asked that question because of yours. I think we talked about the time and the effort required to be successful. How much people are losing that aren’t successful? 80% people not actually making money when they start out. Really important that you do it the right way, educate yourself.

And then there’s comments in there about it being semi-passive. Once you learn and you’re on board with it, you’re not working night and day at it, but there can be some semi-passive approaches to it, even as an active. Would you agree to that?

Andrew Mitchem:

Yeah, absolutely. As Steven said near the beginning, you could trade once a month, once a week, once a day. It’s up to you. I personally trade no more than 30 minutes as a full-time trader of chart time per day.

Patrick Grimes:

You’re full-time 30 minutes a day, that’s your full time?

Andrew Mitchem:

30 minutes chart time. 15 minutes at 5:00 P.M. New York time and 15 minutes at 5:00 A.M. [inaudible 01:01:02].

Steven Primo:

I think Andrew was the kindred soul here. Because we’re right along the same wavelength. Exact same way I feel about it.

Patrick Grimes:

I’m going to write a note to get some people that disagree about stuff. No, I’m teasing. So what are the factors, I guess, to evaluating… Sorry. Actually this is a better one. So PIPs, why don’t you talk about what PIPs are. And the other one that I wanted to look at, I’ll find it eventually, but why don’t you start out with what PIPs are.

Andrew Mitchem:

Okay, so a PIP is a price index point, I think it’s officially called. So 1 cent of movement has 100 PIPs within it. So it’s a hundredth of 1 cent movement. Now, you don’t need a very big movement in the Forex market to have a lot of gain or loss if you get it wrong. So it’s a hundredth of a cent. The issue is that a lot of people count their success in PIPs. If you have a look online, everybody goes, “I made a hundred PIPs on the trade.” To me that’s irrelevant. I, as mentioned, risk let’s say half of 1%. If I have a three to one reward-to-risk trade, it means I’m risking one part, half of 1%, to make three parts, one and half percent. So for me, regardless of the trade, regardless of its stop-loss in size, its timeframe, how long it’s in the market for, have your low control risk, high rewards of risk trades, and forget PIPs.

Steven Primo:

Yes, the way I define PIPs, it’s just a unit of measurement. That’s all it is. And every market, tradable market, has a unit of measurement. Stocks have 1 cent, futures have different units of measurement, and PIPs are just a unit of measurement in currency pairs.

Patrick Grimes:

A couple of questions I think we’ve already answered, Ferdinand, we talked about leverage. I wove that one in there. We talked about comparison and contrasting this versus other investments, other passive investments, Donald. If there’s any further questions, go ahead and drop it in. Anise is saying thank you so much. “High risk is a killer and suicidal, especially in Forex,” Anise is saying, and I think we all agree with that. Let’s see. So how did COVID impact the strategy?

Steven Primo:

Oh well, I can just speak. If you remember the beginning of COVID, when it went straight down, the market, we had some of the best gains ever because our strategies generate buy and sell signals. So all we’re looking for is just a real strong movement, and the movement was down, and then when the market started to go back up, and even with currency pairs, when you have the volatility, I think it really doesn’t matter. What you’re looking for is really trending volatility, regardless of what market. What you really don’t want is that kind of when the pond just dries up and there’s no movement at all, that’s where you get that whipsaw. And that can happen at any time. You don’t need COVID or anything. That can happen in the summer months. So what you’re really looking for is a really strong trending market regardless of what it is, and then you just jump on board.

Patrick Grimes:

So let’s talk about correlation to stocks. As we talk about a lot of non-correlation, meaning things that don’t rise and fall, what the majority of passive investors have, and then there are ROA, 401(k), or the stock portfolio. Do you see Forex investment returns correlate somewhat to the stock market?

Andrew Mitchem:

I’ll have to let Steven answer that one.

Steven Primo:

Yeah, I personally don’t know. And I don’t look at that either. Once again, I hate to be a broken record, but no, it’s of no interest to me. I teach my students to focus on the one market you’re trading. That’s all. Because as my mentors taught me, said, “Steve, you’re overcomplicating things. You’re looking at too many different indicators and markets all at one time. Just focus on a few things.”

And so, I think when you start to do that, look at different correlations and everything, you start to go down that path, a slippery slope of when you’re making things a little bit too complicated. I know I think differently from other educators, but that’s what I just like to focus on. In fact, I only look at one market at a time. So if I’m trading currency pairs or I’m futures, stocks, that’s all I’m looking at.

Patrick Grimes:

So Donald is saying he’s retired and looking for fixed income. Is there a way to use Forex to get fixed retirement income?

Steven Primo:

Go ahead, Andrew.

Andrew Mitchem:

Fixed retirement income? Does he want to do this for himself?

Patrick Grimes:

It sounds like it.

Andrew Mitchem:

If he wants to do it for himself, then fantastic. Put a bit of time in to learn how to do it properly and you’ll definitely do very well over time. Just depends of who he is. I suppose if he’s retired, he’s got that time to put into the education, the learning. Fantastic. You’re never going to get a straight perfect line. That’s the thing. Market conditions change all the time. When we said that 5 to 10% per month, some months you’ll probably have losing months. It just happens. Some months you might have 20% gain. There’s never a straight line in any equity [inaudible 01:06:12].

Patrick Grimes:

Sounds like the answer is no. You can’t get a fixed income. You can get some income though possibly. So what are the tax implications of gains and losses in Forex trading?

Andrew Mitchem:

Tax implications?

Patrick Grimes:

Yeah, how are they taxed, gains and losses?

Andrew Mitchem:

I’m not an accountant and I would imagine every country would be very different.

Patrick Grimes:

Steven.

Andrew Mitchem:

I can tell you what I personally do.

Steven Primo:

Once again, I’m sorry, I’m sounding like a broken record. It doesn’t matter to me. I don’t even look at that. I just look at if I’m profitable or not. That’s the price of doing business.

Patrick Grimes:

Okay, and-

Steven Primo:

Most of my trading, excuse me, most of my trading is day trading. I know not everyone day trades.

Patrick Grimes:

Let’s see. It sounds like Brad’s talking about an opportunity for compounding gains as your reinvestment. David, “Takes a lot of discipline and persistence.”

“Can I do it with retirement accounts?” I would think, of course, self-directed retirement account. And we can help you out with that, James, if you’re looking to get something allocated into self-directed.

We’ve talked a little bit about correlation, geopolitical events. You guys don’t even watch the news anymore. So Mike, I think we answered that question. What role do central banks play?

Steven Primo:

You’re going to get the same answer.

Andrew Mitchem:

Same answer. Look at the charts.

Steven Primo:

Yeah. This is more along the side of the fundamentals. It’s just… You know, traders, I’m not talking about investors-

Patrick Grimes:

Your indicators don’t involve all that. Your indicators are [inaudible 01:07:56].

Steven Primo:

Yeah. Traders don’t get involved.

Patrick Grimes:

Yeah. Okay. And I just did look up the tax implications and it looks like it can be handled in various different ways depending upon what you’re doing. So probably need to talk to your CPA about that. There’s no easy answer to that one.

I’m going to go through these. There’s some people really hanging in here to the very end. “How does currency trading fit into a passive investor’s broader asset allocation strategy? So what part of my portfolio should be allocated into this?” And so what would you guys say? So if somebody comes along, they’re like, “Hey, I have $5 million. I’m not real sure how much I should start playing in the sandbox of Forex with.” And so maybe I start small, but eventually, what allocation do you think is responsible or the right choice in this? What do you guys, what do you think, Andrew and Steven?

Steven Primo:

Right off the top of my head, I would say 25%, just right off the top of my head, of my account, whatever I had.

Andrew Mitchem:

I’m going to have a different answer to Steven for the first time. And that to me, it doesn’t really matter how much you have because it… It depends if you want to put how much of your own money into it as well. Learn how to do it properly first. But with these things called prop firms around, if you can trade properly, you can use someone else’s money and make a percentage gain on that as well. So you don’t even have to put any money of you own into it.

Patrick Grimes:

Interesting. Yeah. So in our world we like to show the allocations of the wealthy, and Lily, if you look at any of our webinars, we’ll show the Wolf wealth from middle income, high income, ultra wealthy where they have allocations of 10, 20, 30 plus percent real estate, 20 some percent in other alts, and the rest in bonds and stocks. And so, you really need to look at allocations in those kind of pie charts. And you set up a call. And you’re really about pie charting your allocations and understanding what you think the allocations are, what risks do you see in each of those allocations. And do you see those rising and falling? Do you feel like you’re well indexed into non-correlated investments?

But typically, our belief is you need to be on lots of different investments. So foundations in lots of different market fundamentals. So we would never say something like 25. We usually say no more than 5 to 10% in any one strategy. And hopefully within that strategy, you’re diversifying into different kinds of investments within there. Again, it’s about capital preservation and diversification, and that’s my belief.

And again, none of us, I don’t think, are financial advisors, CPAs, or attorneys. So this is not finance, tax, or legal advice. But that’s typically my answer, Lily. Set up a call. Happy to chat more about my own personal strategies.

Gary asked if I have to be a credited investor to invest in Patrick’s funds. And that’s true, yes, you do need to be an accredited investor. 200,000 in income, 300,000 combined with your spouse, or a million dollars in net worth, not including your personal residence, in order to invest in the Passive Investing Mastery affiliate funds.

And we just have a few more. Michael’s asking again, “Is there a way to do it truly passively?” And it sounds like the recommendation is no, you really need to participate to some level from the gentleman here, Michael. And then let’s see, “Just put my name as Session please. Currency trading…” Okay, so Session, again, some great [inaudible 01:11:39].

I think we pretty much got these questions handled. We’re towards the end. “This should be treated as a business. This strategy should be treated as a business if you’re serious about it.” And although we’re saying the full-time trader, these guys are at 30 minutes a day, you do treat it very seriously like a business. I’d probably agree with that. And I think that gets us to the end of this. If we missed your question… Maybe the last question, “Do your research on prop firms if you want to go that route.” Okay, so that was just a comment, but I think we got it all.

Steven, wish we could have seen you, but I understand. No problem.

Steven Primo:

Maybe next time. Maybe next time.

Patrick Grimes:

There are days when I would like to turn off my video all day too. I’m sure the audience have seen enough of my face. They probably wish I did the same. So hopefully we didn’t get anybody seasick with your volume thing going up and down. But really great to have you, Steven. Andrew, amazing job. This was an incredible panel, really rock stars, really strong in these asset classes. Couldn’t be happier with your guys’ answers, your participation.

Everybody here. Don’t forget, one week from today we’re going to talk about Venture Capital for Passive Investors: Syndication Strategies That Work. I have two really solid guys that are going to come in, talk big advice for people who are actually doing this and do it successfully. And so really excited about that. One week from today. Andrew, Steven, you want to say your goodbyes, we’re going to wrap it up now.

Steven Primo:

I just want to say thank you for inviting me and I just want to say it was a pleasure meeting you both, Patrick and Andrew, and I’d love to work with both of you again. It was great.

Andrew Mitchem:

And likewise, thank you so much for inviting me. Nice to have someone from outside the States, different part of the world. And Steven, yeah, it sounds like that we do very, very similar things and think the same, which I suppose like you said, over time you get to work out what works and what doesn’t. So yeah, thank you for being here. Thanks for participating with me. I really enjoyed it and thank you Patrick and all your team.

Patrick Grimes:

All right, the replay will be out in a couple of days and we’ll make sure to pass it to Andrew and Steven, and we’ll look forward to seeing everybody else one week from today right here to learn about venture capital. You guys all have a good evening.