Would you do anything for money?

In this episode of Truth About FX, Walter digs into what really makes a trader successful. Is it the money or driving a brand new Ferrari? According to Walter, having this one key element can define a trader’s success or failure. He tackles the importance of understanding risk and knowing yourself.

Hugh also shares his idea of what a successful trader is and what other people perceive as being a “successful trader”.

Download (Duration: 10:07 / 11.5 MB)

In This Episode:

00:47 – scrapping the system

02:12 – fair-weather trader

05:12 – submerged

07:32 – morals for a buck

09:43 – try to withstand

Tweetables:

Understand the dynamics of risk. [Click To Tweet].

Be true to who you are.  [Click To Tweet].

Am I able to let it go? [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. How do you define success in forex trading? I mean, obviously, that varies by individual but it’ll be interesting. I’ll be interested to hear your definition.

Walter: Probably a successful trader to me is one that can go through a drawdown with a perspective. If you go through a drawdown and you find yourself changing your system; or if you go through a drawdown and at least find yourself completely scrapping the system, not even changing the rules but just completely throwing it away; or if you go through a drawdown and have really emotional pain, consider giving in into that dark place and reconsider your life as a trader; all of those things come from the root of either not understanding the dynamics of your system or more likely not understanding risk and the definition of risk for your trading.

Being able to go through those drawdowns is really what I consider a successful trader. I’m not the only one. If you talk to other traders who’ve been around for awhile, longer than me, they’ll tell you it doesn’t really matter that there’s a drawdown. Everyone has them.

What matters is what do you do after your drawdown. Are you going to pull yourself out of it or do you freak out and do you change the game? That’s the main thing here. It’s to make sure you know everything that you need to know about the drawdown that’s coming because everyone listening to this is going to have a drawdown.

If you’re not in one right now, you’re going to have one that’s going to be terrible. That’s trading. That’s it. I mean, if you look back and you look at these famous traders like Jesse Livermore and a guy that I know — that I knew — these traders, they couldn’t handle the drawdown and that’s the end of them.

That was literally the end of them because they couldn’t handle a drawdown. Understanding the dynamics of risk and how that plays into your future drawdown and how are you going to get out of it, that really the key part of it to me.

Not trying to be a fair-weather trader where you’re always going to what...