In this episode of Truth About FX, Walter digs into developing your trading confidence and getting the best juices out from backtesting your system. How it pays to be patient with the charts and wait for the right signals to come.

You will also find here an interesting story about a lion hunting in the mountains and how this can relate to your trading barrier.

Download (Duration: 04:20 / 4.96 MB)

In This Episode:

00:47 – brutally honest

01:19 – perfection

02:42 – wait

04:00 – super boring

Tweetables:

Sit, watch and wait [Click To Tweet].

Be patient and wait for your signals  [Click To Tweet].

Can you predict the markets?  [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. This is a very specific question from a person but it’s a question that gets asked a lot. This person says, “I want to be able to have an eye for the charts, be able to be confident when placing trades. I want to learn how to backtest my systems and I want to learn to build the charts or understand where the trades are going.”

What would you say to this person? How could they get to that level?

Walter: I am going to be brutally honest. I think that is the wrong approach. I really think that — and I understand it. I’ve been there, I get it. I get what this person is saying but I think this trader has got the wrong goal.

It sounds like to me, reading the question, it is learning everything about the markets, knowing where the money is going to be, the direction and all that. This person wants to be able to predict markets and I think that’s the wrong approach. I think that is the path to overtrading and the path to just driving yourself crazy.

Hugh: Yeah. Looking for perfection, right?

Walter: Yeah, perfection. This person wants to sit down at the computer, fire it up, look at the charts and take a trade. That’s what it sounds like to me. To me, that is not the way that the real money is made.

To me — and maybe it’s just because I’ve only figured it out this other way — but maybe people can do that. There are people out there who can just sit down, look at the charts and go, “Oh! It’s going up right now. Poof! Put in a buy.” But, that is not the way I’ve learned and the way that the traders I know who make money consistently do it.

They… Actually, the best way I’ve heard it presented was — this is great and I can’t remember who was — but somebody was saying like “Have you ever seen a cougar hunt like a mountain lion?”

What does that mountain mine do? If you came upon a mountain lion who is hunting, you would probably think that he was asleep because he’s just lying down on a rock, just lazily lying down, soaking up the sun, just sitting there. You would think, “Oh, he’s just sleeping. He’s just having midday nap.” But, really, he is hunting.

That is exactly what the best traders do. They are not sitting there, aggressively going after pips.