What was the main attraction and / or benefit that triggered your initial involvement in forex trading?

• [A] Making a lot of money with little money?
• [B] Making very high returns due to low margins?
• [C] Provide additional income on a part-time basis?
• [D] Potential for non-job based consistent long term revenue?
• [E] Other? (Please give details)

The winner by a country mile is making a lot of money with little money and [B].

I also ask a follow-up question:

Have your views regarding the above changed?

In almost every case where the initial response was [A] or [B] it has changed.

This is fascinating. Let me explain to you why.

It is clear from further investigation that making a lot of money with little money is for most people entering forex trading not enough.

In addition to a lot with a little it had to be

These two add-ons are really what have changed for the people on my personal mentoring program.

They have realized like oil and water, “a lot with a little” and “quick & easy” doesn’t mix.

Thousands and thousands of entrepreneurs have done it. You probably know a few amongst family, friends and acquaintances.

I can even use myself as an example. In 1998 I have started trading with a relatively small amount and until now, 14 years later, I have sustained myself and my family solely from my expertise in trading.

I can assure you it was neither quick nor easy!

And take Wall Street (forex) trading star Jim Leitner who has made millions and millions himself. From a short CV you can see that he started out with a little money (and clearly he made a lot):

Again, it is clear that quick & easy doesn’t feature as part of really making lots of money with little money.

So, where does this deadly “quick & easy” meme come from?

(“Meme” = A unit of cultural information, such as a cultural practice or idea, that is transmitted verbally or by repeated action from one mind to another.)

How has it sneaked into the equation and thwarted the plans of so many?

Marketing wizards!

Marketing wizards have successfully redefined the “make lots of money with little money” need by overwhelmingly spreading the “quick and easy” meme and saturating the entrance portals to the forex trading industry with it.

The legitimate need has been replaced with a bogus solution.

I can tell you this: In real life forex trading is an entrepreneurial effort with a long term focus, with the realities of toil, hard work, continuous effort and uncertainty, need for lucky breaks (but remember the harder you work the luckier you get) and the always looming possibility of ultimate failure or success, due to internal or external factors that change the whole time.

Marketing wizards have successfully replaced this (above) with the idea that forex trading is a series of effortless short term experiments to find some magic system which will deliver certainty about a lot of money with little money (with continued little effort and in short time over and over (every day / every week / every month) forever.

The ultimate marketing coup is to create a need or problem and then provide the solution.

In today’s “instant” culture there is no time for time consuming processes or solutions. (Things like the realities of forex trading like it really is …)

You spend a few hundred bucks, plug in and sit back to determine if this one is your personal quick and easy route to permanent riches with

The illusion is created that the immediate performance (after purchase) of a system is normative for future performance.

If people believe this, marketing wizards will be able to sell product after product in short order to serial buyers.

Therefore the subtle introduction and misuse of a small three letter word, “per”. (Per = “with every / each instance”)

I kid you not

The following has arrived actually in”My FX Inbox” after I have penned the first draft of this blog post:

I am sure you can see that this dynamic is a far cry away from the legitimate goal to make a lot of money out of little money.

The bottom line is most people start their attempts with forex trading with a haphazard concoction of own attempts, freebies, and other short term efforts, robots, signals or whatever “quick & easy brew” the marketing wizards dish up at that time and never get even close to their original goal of making lots of money with little money”.

Have YOU TOO lost the plot?

Are you also pretending to yourself and the people depending on you, and your judgement in the matters of their long term financial future that you are indeed looking to make a lot of money with little money and that is why you are spending all that time trawling the forex trading space

you just want the quick & easy?

I hope not.

Making a lot of money with little money is not something accomplished in a few weeks by doing nothing with no risk, no money down, no problems, no uncertainty, no sleepless nights, no trauma, no fear, no worries and no luck (but you make your own luck!)

If you believe that you will not be making lots of money … ever.

Other people will be making lots of money – and some of that will be made of you.

Do the right thing, right.

You are a hardworking, intelligent and street smart person?

Everything you have really applied yourself too has worked out well?

Except until now, “forex trading”?

Maybe, just maybe it is because you have lost the plot about making lots of money with little money?

Maybe, just maybe it is because you have been fooled by the “quick and easy” mindset?

Maybe, just maybe the problem is not “forex trading” but your mindset?!

It is not quick and easy, but here is your opportunity to turn the tables:

It really is heart breaking to realize the extent to which marketing wizards have cornered this market.

Tough times

I am honest with you. I had my days and weeks and months of despair about this. The reason is I have so much evidence that opposed to what sells so easy, I offer something that actually can make the difference people want – but it isn’t an easy sell. And while I have no intention to make something that is tough sound quick, easy and effortless, no marketing wizard worth his salt will try to sell something that doesn’t push all the right buttons to make the sale. Now.

Eventually I realized that the right persons will probably find me. Once they do they will know what to do thereafter.

That was quite a relief.

Which brings me to broken things and not broken things …

If you have been around this forex block a few times you probably have tried several strategies / systems / methods, but nothing “worked” for you. I don’t exclude BWILC for one moment because it might have been one of the things you have tried -and failed.

The problem is this: the broken system may very well not be some of the trading systems / strategies / methods you have tried through the years but your whole approach to this forex trading endeavour.

My approach to forex trading (as described in BWILC 2004 & 2010) and the approach to assist others to become adept at forex trading “ain’t broken”, but what about yours?

Are you still trying the one quick fix after the other to fix something that is clearly broken? But it remains broken?

If your approach (to trading as a financial endeavour you are involved in) is broken, and you desperately want to find the fix this is your opportunity to reconsider your whole approach about fixing something clearly broken.

What could be the point in chasing after literally hundreds of fixes, maybe picking a few, costing you hundreds or thousands of wasted dollars and delivering nothing but your name on one more list to be bombarded with 10 more supposedly brilliant strategies, bogus bonuses (which you have from four years ago somewhere on your hard drive when it was the latest and greatest final fix fad you bought at that time!) and made up real life rags to riches stories?

The reason I have decided to write this blog post is a message one of my Class of 2012 personal mentoring clients wrote me in his latest weekly progress report, regarding something he has read in one of the books that I recommend as additional background reading.

His remark was that “this sounds exactly like what we are doing”.

That is spot on.

The interesting thing is that he was referring to the forex trading strategy of a lesser known Wall Street legend who became a fund manager and eventually since 1997 he basically traded only his own money. Money he made extracting two billion United States dollars from the market for employers and clients up to that time.

Now isn’t that amazing? To read in a book published in 2006 that a Wall Street guru, turned own account trader, has been trading a forex trading strategy which you immediately recognize as similar to your own (and published in 2004)?

Here is the text describing not only the trading system, but also the price characteristics observed and over the same time period which lies at the heart of my approach to forex trading, an approach that clearly isn’t broken and doesn’t need any fixing.

“The other thing that is pretty obvious in fx is that daily volatilities are much higher than the information received. Think of it like this: The euro bottomed out in July 2001 at around .83 to the dollar and by Jan 2004 it was trading at 1.28. That’s a 45 big figure move divided by 900 days, giving an average daily move of 5 pips, assuming straight line depreciation. Say one month option volatility averaged around 10 percent of that period, implying a daily expected range of 75 pips. That’s a signal-to-noise ratio of 1 to 15. In other words, there was 15 times as much noise as there was information in prices.”

“Noise is just noise, and it’s clearly mean reverting. Knowing that, we should be trading mean reverting strategies. In the short term, it’s a no-brainer to be running daily and weekly mean reverting strategies. When things move up by whatever definition you use, you should sell and when they move back down, you should buy. On average, over time you’re going to make money or earn risk premia.”

The above refers to a period around 1999 to 2005/6. Things have changed a bit.

It became more volatile.

More noisy.

But the principles of a trading system that doesn’t need fixing haven’t changed one iota.

I am writing you this because I want to make you an offer.

My Class of 2012 can accommodate you at any time, but if you join now, before March 31st, 2012, you still have 9 full months during 2012 to fix whatever is broken in your whole approach to forex trading.

Just have a look at the Class of 2012 Personal Mentoring Application form below.

You will instantly know that this is the right offer for you to fix that broken approach to forex trading.

Allow me a bit of marketing wizardy:

Until March 31st 2012 there is a special offer, a huge discount and an extra three months of personal mentoring.

A very important note for US residents: Especially those who think the “BWILC strategy” can’t be traded by US residents due to your ridiculous regulation. You make a mistake. There are easy and non-intrusive workarounds from which you can chose whichever fit you best.

Download your Class of 2012 discounted application form here, complete and return it to me as indicated.

I have said in one of the previous blog posts that people are not successful with trading because they don’t understand what it is all about.

I think there is for most people a huge disconnect between what they hope they can achieve in short order with forex trading versus the reality.

To overcome this you need an approach and attitude that is supported by the structure of the Slow Grow to Pro program.

I want to illustrate this for you with a real life example from the fascinating world of sports training, particularly golf.

Little kid golf

My eldest daughter, at 11, is one of South Africa’s top age group girl golf players. She has been playing competition golf since age 9 and some of her achievements are qualification to play in some US kids tournaments, SA o12 Provincial Team Championships and provincial primary schools team championships.

I am not a golfer. I can count the number of 18 hole rounds I have hacked through on one hand.

Recently I realized the only way forward would be for me to become a golfer in order to create many more opportunities for her to play in a friendly competitive environment – at least once a week.

That meant I had to take up golf.
I needed coaching.
In fact I needed new clubs.
I was a scratch golfer. Starting from scratch!

So I signed up for a series of lessons with her coach, I bought beginners clubs and I joined a training facility with a driving range and pitching and putting areas where you can hit as many balls as you like or can per day, every day.

From the above you might imagine that I had very strong motivation. Its for my kid, what more motivation do you need?

I was determined to make this work. And I was in quite a hurry. Let me also just add that I had a modicum of ability. I am generally OK with any ball sports and I have good “ball sense” from playing everything since I was a kid (rugby, cricket, tennis, squash, table tennis (university level)).

So I set goals which basically were to get up to Danielle’s level by February 2011. Come the new year we must play regularly and it must be competitive.

I started in August. By early October I became quite adept at hitting the ball on the driving range and by mid November we had a 9 hole Parent-Kid tournament, playing alternate shots. Due to rain I couldn’t get a practice round in so I pretty much teed up on the first hole of a competition very much like a new forex trader sits in front of his computer with his brand new trading account, funded, opened and ready to go!

By this time I had about 80 hours of range practice during a 8 week period. If I am dedicated I am dedicated. No shortage of motivation or ability to make it work.

I have visualized and seen on the range many a great shot I have played. Hitting my first drive to the best of my ability down the middle of the fairway was a matter of “swinging the club”.

So I thought.

As I stepped on to the tee box and teed my ball up I literally felt the most ridiculous (I thought) stress. Well, this is new. You better shake it or you are going to shank (hit it 45 degrees from the target line) it went through my mind. I made three or four practice swings, following my procedure, including visualizing my shot sailing through the air to the middle of the fairway just like a pro.

But I could feel the nervous tension.

Boet, if your backswing is not right this is going to be a disaster.

Time to play.

As I pulled the club back I knew … well, at least I didn’t shank it, but duffed it 70 meters to the left rough under the trees …

Not part of the plan.

Danielle tried hard not to roll around on the ground laughing. I had to remind her I am on her team!

Bottom line is, my five tee shots went like this:

In between I hit a few OK shots but generally I was very disappointed with my first real competition round of golf.

The idea to write about this in the forex space came on that day.

This was a real life experience that so many of you go through or still have to go through. Idea. Goals. Determination. Preparation. Activation. Execution. Oooops. Try again. And again. Its much harder than it sounds. Its so easy on the practice range.

Let’s consider a comparison between golf and forex trading as far as goals and the realism of it all is concerned.

Levels of golf ability

1. Beginners, up and coming young players.
2. Regular weekend players
3. Serious amateurs, league & provincial players
4. Teaching and club professionals:

This group makes a living with their golf. They are also very good players. Danielle’s (and my) coach is a 20-something professional player, who can at any time walk the talk.

5. Top Professional players:

Generally these are the players who are financially free due to their golf prowess. Tiger Woods, Lee Westwood, Ernie Els, Bernard Langer and Y.E. Yang, Graham McDowell.

Let’s turn to forex and typical retail forex traders’ goals

According to my research most people are involved in forex trading to add a non-work related revenue stream, even to escape the “rat race” or to save for their retirement (when they can also continue to trade).

In other words compared to golf they pitch their expectations at least on the 4th level of golf ability. And many thousands aspire to “financial freedom”, that what only a few hundred golf players really achieve.

Yet, apparently, if you compare what they (the aspirant forex professionals) do in preparation to achieve this level of competency they aspire to, a golfer would probably do the following:

The time frame for all of the above? Three months? Six months? Twelve months?

Again, it isn’t a perfect comparison but there is undoubtedly a serious disconnect between the lofty goals retail forex traders set and the road they apparently believe will get them there.

It borders on the absurd.

People are not born traders, just as they are not born golfers.

You can become a good trader, just like you can become a good golfer.

But you need more than motivation. Essentially you need on your level the determination and the preparation and the willingness to do the hard slog. And that in most cases include lots of time.

Trading has certain peculiarities which actually make it possible in many cases to fast track success.

I don’t suggest that 100% of people will have to walk a long and arduous road to trading success like professional golfers have to, but you will agree with me that generally a few weeks or a few months from “hearing about forex trading” to “consistently successful trading”, i..e making some decent return on your investment like a club or teaching professional in golf is far from realistic.

The most unrealistic is that people want to do this without the frustration and pain, without the hard slog.

They want the Big Easy*** but not the hard slog.

Luck plays an important part in trading.

One of the greatest golfers of all time, Gary Player, said “the more I practice the luckier I get.”

Remember that for your trading.

Kind regards

Dirk

***The “Big Easy” is the nickname of the top professional golfer Ernie Els. He is a big person with an easy going demeanour on the course and absolutely effortless, “poetry in motion” golf swing. He is also financially free with golf prize money winnings in the region of $50 million, excluding sponsorships and endorsements. When he won the US Open and became world number one in 1997 it was after years and years of the hard slog to eventually lead to the “big easy”, being financial free.

Be on the lookout for my announcement of the Slo Gro to Pro mentor programme details. The most realistic and cost effective route you can take to “the big easy” according to your goals.

I have already given you some snippets of how relational analysis contribute to the success of the 4×1 (+1) trading strategy with my analysis of the EURUSD and the real time call of the mid-year low.

I got a question a day or so ago which basically said, “yah-yah but what did you do the last few weeks with the euro topping out above 1.4200 and bottoming at 1.3000.” In anybody’s book that is a big move, but not uncommon these days amongst major currencies.

Good question and I am happy to answer as follows:

I am going to give you a slightly edited version of my Monday Briefing of Monday November 8th. This ‘Monday Briefing’ will now become a Weekly Briefing in the Slow Gro to Pro programme. Its purpose is to show you more of the power of proper relational analysis (as done in real-time by the proprietary owner of the concept “relational analysis”).

In the chart below you can see how the EURUSD has made a run from the low in the beginning of June from 1.1875 to 1.4265 on 5 November 2010, a jobs report Friday.

On Monday 8 November, 2010 in my Monday Briefing I wrote a few interesting things but before we get there:

My Monday Briefing readers are quite used to getting advanced insights when compared to other analysis available in the “for free” space. You will remember that I have already explained to you that in the analysis of the financial markets “for free” information is completely useless. Proprietary, valuable information is locked behind passwords and made available to revenue generating clients only.

The Slow Grow to Pro mentor programme will prove that it is the most cost effective way to get extremely value adding information for the 4×1 (+1) trading strategy. This trading strategy we have already seen has produced an amazing 3 out of 4 winners of the prestigious FX Street International Trading Contest.

Today, Monday 6 December I gave my clients a “free analysis” piece (I usually do as I like it and I use it to get quickly up to speed with the “talk of the town” early in the week) which contained this very good advice:

In this post-QE2 environment, it seems the dynamics have changed for the dollar whereby positive US data is good and negative data is bad.

[A bit late to the party with this, aren't we? Probably too much Ichimoko cloud watching in stead of smelling the roses! - DdT ]

And that is pretty much the point, smell the roses while they are fresh in bloom, not when they are wilted and shriveled.

Monday Briefing, 8 November 2010

[For a few weeks the market buzz was all about "Currency Wars" and the eventual resolution would come with the G20 meeting later this specific week.]

101108 Daily Briefing – Recalculating reaction to US data, considering the G20 impact

Analysis

It is important to make the right deductions from the price action between EURUSD and AUDUSD after the jobs report [on Friday 5 November].

As anti-dollar the EURUSD is likely to react more violently negative to good-for-the-USD data. Good-for-the-USD data after QE2 is positive US economic data.

There is an important change and here’s why: [Here I have already smelled the roses!!!!]

Before QE2 it didn’t matter what US data was since QE2 would come, better or worse data would basically affect the extremes of possibilities and not the core of the idea. That put the perspective on that the US would lag in rates to other countries and it fueled the USD funded carry trade.

Now things have changed. (Things always change over time in the economy.)

* First of all in July the market was long USD short EUR and that has significantly changed over the last three months.
* Secondly this USD carry trade got a lot of inflowing money, which means there have been a lot of new investment in “risky markets” riding on a short the USD for the next year or two trade.
* Longer term investors who might have made short term gains well above their lower expectations might be keen to lock in some of the profits and wait out what they think may be a natural dip in risk taking as some adjustments take place in global investor perceptions.
* The market’s eyes will now be on the question, aren’t there indications that the Fed were wrong again and that all indications now might be that the real workings of the free market is developing in the US economy (as opposed to the Wall Street Ponzi scheme). The market is not going to be expectantly looking for bad US data but they are going to look for good US data and they are going to act positively to good USD where during the last three months they have simply ignored it.
* Add to this the rumblings surrounding the PIIGS, although it isn’t necessarily bad, they are there and subconsciously the market understands, PIIGS trouble is at best NOT BUYING the EURO, if not SELLING it OUTRIGHT.

We have already said that the EZ for their economic health, including the PIIGS potential to get out of trouble doesn’t need a strong EURO. A euro at those 1.20 levels will suit them much better than one at 1.50. (There is a 25% difference).

Would it thus in the long run be bad for the Euro and the EZ if they now further put measures in place to safeguard the position of the PIIGS, the EU and the EZ? NO obviously it won’t be bad in the long run and the base that has been laid in May and June that conceptually reversed the “euro to zero” frenzy will be strengthened.

But will things like an increase in CDS costs for PIIGS debt cause short term nerves? Sure.

May the EURO on this make a big dip? YES.

To where?

Let’s say this: in the absence of these potential PIIGS issues and the potential re-awakening of the US economic deep down as might be shown in jobs reports, what was the likelihood level the euro could reach? (Because remember what we have said just late last week: Wall Street will just follow the most easy trend and currently it is buying commodities & emerging market stocks and debt simply because there isn’t a replacement Ponzi scheme (yet).

It would have stayed above 1,40 and made some people really nervous by going up to 1.50.

So what can a dip level be if the PIIGS issue resurfaces and all the old ugly stories hit the headlines for a second time?

[Let me interrupt here. Asking this question on this date with everybody focusing on the G20 and QE2 is already a tribute to the brilliance of relational analysis - a concept I call "scenario planning". You have to be aware of what may be happening. It is basically a form of visualization. "If this happens, how is a chart going to develop?" There are two matters. First, identifying relevant "focus points" and second, visualize the market's behaviour.

There is nothing more satisfying than seeing this visualized chart developing before your eyes and fattening the profits on trades you have put in place. My response to the question asked was to say (truthfully) I have literally just earlier that day booked a 850 pip EURUSD short just above 1.3200.]

I’d say it is about the level where the first round really overshot and that was sub EURUSD 1.34/3. At that time we thought the overshoot would be relatively minor, not going below 1.30, or if then not below the 2008 low of 1.24/5. The speed at which it recovered from 1.18/9 to 1.35 basically give me confidence that a second round dip might be pretty much limited as the Europeans will first of all be out to make sure everyone understand that political union and currency union are their priorities. [I interrupt: How many times have they stressed that in the last few weeks?]

Also remember on the positive side for the Euro, core Europe is doing very well as it wasn’t originally flawed by a housing bubble thus the Germans are OK, they dominate the EZ economy and they only have one mandate and that is to fight inflation and they rule the roost in the ECB. The ECB is poised to get rid of anything like money printing as soon as possible.

What has changed?

Mainly we will see a reversal of recent good news is bad for the USD, bad news is bad for the USD as far as US data is concerned but it will probably take another good jobs report to solidify it.

Is the euro rally spent?

Now I must be careful. I am in relaxed dip buying mode.

What about the G20

There are lots of expectations about this and I have explained last week that in addition to the US winning the race to the bottom (of currency value) hands down, the rest are now unanimously fingering the US as currency manipulator par excellence.

It is difficult for me to see how the outcome of the G20 would be such that everybody just continue to do what they have done recently.

Now keep in mind that if the US is perceived as the bully in the school yard just doing what they want trying to slip through tricks to subdue the rest (Geihtner caps on surpluses) in addition to hitting out left right and center (Bernanke flooding Wall Street with dollar debasing cash to invest in emerging markets) the BOJ who restrained themselves to not even increasing their QE and limiting overt intervention to one day, are practically saints.

I think the G20 will probably include a sub-text of “lets everyone play nice” to reverse the recent going-ons which should lead to some USD strenght especially where it has “unduly” been weak. Due to the weight of the EURO in the dollar index it is likely that under such circumstances the USD will obviously strengthen in the short term “technically” also versus the euro.

I think the outcome of the G20 will be positive for USD strength, and that might be already factored in this week, if not directly then indirectly. I.e. some may not sell euro in the first place because of the G20, but because of the PIIGS but this will double for the G20 story as well…

* * * * * * * *

That was the Analysis portion of the Weekly Briefing on November 8th in which I was in “relaxed EURUSD dip-buying mode” after it made a multi-month high on November 5th.

I have also indicated that the mood regarding good vs bad US data has already changed.

Let’s look at a chart to see what happened next:

What can I say?

If you have the benefit of relational analysis combined with the 4×1(+1) trading strategy you are in a good spot to make success of currency trading.

As a member of the Slow Grow to Pro programme (most basic level) you will every week get my Weekly briefing containing the very best I can offer in terms of market (relational) analysis. I can assure you I have learned that its all about smelling the roses in their prime bloom time, not charting the path of how they have been wilting.

I want to close with to snippets right out of my Inbox:

An existing Class of 2010 Personal mentoring member wrote me the other day:

I have just completed the median grid basics tasks. Beginning to get the hang of this through reading your DrForex Daily Briefings. Need to keep working on my own relational analysis but your suggested sources are very valuable. In the meantime I have continued my trading despite my terrible busy schedule you are aware of. My portfolio has recovered from the recent hit and is back up from just above $70,000 to over $100,000. This is mostly thanks to USDJPY positions that I would not have looked at without the insights and knowledge provided by your briefings and the magic of relational analysis. Your bigger picture insights are truly helpful and I’m owning my own brain more every day.

And just today I got this from somebody via Ask DrForex:

With an analytical mind, what I need, is hands on trading to execute orders with calculated risks, cut losses without stops (apparently rampant manipulation by some brokers regarding stop losses) and to close trades at the end of trading day. I am in a position to spent the entire time in front of the computer during trading hours. This by default means that my forex personality leans towards day trading. Sculpting too fast, trend and range trading to slow. My strategy at the moment is to trade only EUR/USD between 14 and 18 hrs (give or take) and to use a 15 min and 5 min chart with trend candles, moving averages, pivot points, Bollinger bands, RSI, MACD and ADX. Use the 15 min chart in conjunction with fundamentals to establish the trend and 5 min chart for entry and exit points to either go long on depreciating or short on appreciating dollars. Having said that, and being ignorant, I still need a lot more experience, practice and strategy in order to have more gains than losses.

All I can offer you is a total paradigm shift. That or nothing.

There are clearly many ways to lose your money with forex trading and apparently only a few ways to make money.

One of those few ways to make money seems to be relational analysis combined with the 4×1(+1) trading strategy.

This is what the Slow Grow to Pro as well as my Personal Mentoring programmes are all about.

On Wednesday 8 December I will reveal all the details of the Slow Grow to Pro programme and you can subscribe either with a ridiculously low monthly or discounted yearly subscription fee. If you think you will benefit more from personal mentoring (and amongst others get Daily Briefings) and that you are ready now then you can enrol by completing the application available on the “Personal Online Mentoring” page.

Tomorrow I will make one last post before your chance on Wednesday 8 December to become a Slow Grow to Pro member (with some added bonuses) about the “Hard Slog” to become the “Big Easy”.

In the area of online business development and marketing I have done this numerous times and I will probably do it a few more times because I am here to stay.

But the question is if it is beneficial and is it optimal to work like this? The answer is clearly “NO”.

Even though you can successfully argue that you do move forward, jumping from one product or strategy or method to build your business to another and making complete U-turns in some cases, grab here, leave there, eventually you are in a one-step-forward-and-two-steps-back loop.

A while ago I have unsubscribed from almost all the online business email lists I was on, I have chucked all the programmes (you know how it works, you bought something so you stay on the list even though all you get is more affiliate product offers), canceled subscriptions – even serious guru’s – and decided to stick to ONE!

One I could identify with, I feel we share some values and I feel he has more than his own interest at heart. Another thing is I can recognize value. And what he offered was really valuable and dirt cheap. I knew (and know) if I contribute what I can the monthly subscription I pay would be the bargain of a lifetime.

In the blink of an eye the results were there: clarity, purpose.

Where I was in a perpetual state of uncertainty about what to do next, where to focus everything was just like so obvious. I am not talking specific instruction. To tell you the truth I haven’t even read half of the stuff I have received since then. The decision to go from the many to the one was the crucial point.

Trading history

I ask my personal mentoring clients since many years ago about their “trading history” including their training efforts or what they did to build expertise. There is a wealth of information once you begin to analyse and compare these histories.

At this stage I want to consider one of the most crucial results.

Almost all traders don’t have focus. They really don’t progress. They are like a cat on a hot tin roof.

They either jump from methodology to methodology of the same basic strategy (lessons in technical analysis of very short term timeframes), or from strategy to strategy, (i.e technical analysis indicator based, technical analysis wave / pivot based / news trading / bar counting / chart patterns / news trading / swing trading / scalping). Or from this market to that market or from this broker to that broker.

There is no focus.
No purpose.
No clarity.
No simplicity.
No trust.

Just confusion.

For these clients the equivalent of what I have described above was to join my personal mentoring programme. Suddenly their focus shifted from “what can this ‘strategy’ proof for me in the next month to “what return would you like to generate after you have done six / 12 months mentoring and then traded for 12 months?

Immediately there is focus, purpose, clarity, simplicity, trust. You know exactly where you are going to be and what you are going to try to achieve for the next 24 months. I think you will agree a six week money back guarantee doesn’t compare at all.

The clutter is gone.
You can get your teeth in the real deal.
You can develop a business.
You can create a road to the wealth you want – the reason you are in the forex space in the first place.

Subscribing to my Slow Grow to Pro mentor programme will be this moment of truth for you.

• I remove the financial obstacles there may be. To what extent I’ll explain a bit later.
• I remove the “timing” aspects there may be. We have spoken about it a few days ago.
• I remove the obstacle of too high expectations to be met too quickly – the whole “instant success” culture that simply isn’t compatible with sustainable trading
• I remove doubts. Psychological clutter. Doubts you have about the essence of what you are busy with. You know what I am talking about. Should I try again? Should I try this thing? Maybe trading signals? Maybe a robot? Maybe expensive class room coaching? Maybe binary options?

The Slow Grow to Pro programme gives you a purposeful, focused, clear road to travel on.

Information overload devalues valuable insights

The moment information enters the realm of public space it competes with a total avalanche of other information, like tossing a spade full of well cultivated agricultural ground in a desert. It is immediately absorbed and transformed to more sand. It becomes meaningless. Inherently it has life giving value. Once out in the open it just becomes useless for anyone.

In the retail forex space the extent of information overload is so big that value is simply devalued and reduced to zero the moment it hits public space.

I have a genetic predisposition against giving my valuable information away for free and see how it disperse amongst all the devalued information in the forex space.

In the Slow Grow to Pro programme I know my efforts and insights will be highly valued and therefore I will provide continuous valuable sustainable forex trading business related insights.

The Slow Grow to Pro programme will provide highly valuable, exclusive, privileged content on its most basic entry level of participation.

As I have said recently. Trade entry and exit methodologies and even basic strategies are only a small piece of the successful trading puzzle.

Once you embrace the availability of time and don’t race time to achieve some instant so-called success you will discover the fullness of the trading experience, the “lightness” of the unbearable lightness of trading.

Formally I will take you on a real-time relational analysis journey.

Once traders understand the depth of the limitations of technical analysis only trading the need for understanding fundamentals, the real drivers of currency prices, looms large and as a daunting task.

Not so for me.

I am quite adept at it and I can teach you to do it yourself.

On the entry level the Slow Grow to Pro programme will offer valued relational analysis and trading business development information / knowledge / tools.

In addition as an entry level participant in The Slow Grow to Pro programme you can chose from a variety of training modules to purchase when you are ready.

• You will be able to pick and chose from the current modules of my personal mentor programme to plot your own progress.
• The Slow Grow to Pro programme have included critical personalization offers. At critical points you will be able to get that personal touch only I can provide.
• One key element of the programme is an evaluation of your early trading efforts and how you implement the strategy. I have structured it as a self-evaluation, but for my personal mentoring clients I evaluate / critique their evaluation. I’ll do this for Slow Grow to Pro participants too when they purchase this module.
• My personal mentoring programme conclude with a Trading Blueprint. I evaluate the trading blueprint, make suggestions and try to improve it. I’ll do this for Slow Grow to Pro participants too when they purchase this module.

Chief analysts & risk manager

The Slow Grow to Pro programme offers you two vital functions for your forex trading business you don’t have (and then you wonder why you are struggling):

Any successful trading business have at least one chief analyst or strategist that do the necessary research and analysis that gives direction for traders and trading managers.

• I am your chief strategist and market analyst. Even on the most basic entry level of the Slow Grow to pro programme.

Any successful trading business has a chief trader / risk manager who oversees general risk taking by the traders / decision makers.

• I am your risk manager (more than chief trader in this context) who will be looking out for you.

Best of all – your entry level participation in the SGtP programme for the first year is covered

Sponsorship by AskoBid, regulated EU broker

Here is the cherry on top:

You can get your first year of basic (entry level) membership for free**.

AskoBid MT4 will sponsor up to 100% of the cost of your first year entry level membership by way of a credit to your AskoBid MT4 live trading account to the value of your paid up first year SGtP membership.

**Terms and conditions apply.

FX Challenge 2011

AskoBid MT4 will sponsor prizes up to $25,000 for an internal FX Challenge Trading Competition for members of the Slow Grow to Pro programme (and other mentoring clients).

Yes we are going to repeat the hugely successful FX Challenge concept, tailor-made for optimal progress en route your sustainable forex trading business.

Details to follow, but consider this, the FX Challenge 2011 is a specific “product” you can purchase.

In the spirit of maximum flexibility you can trade with any broker but if you trade with AskoBid MT4 you qualify for real money prizes deposited to your trading account.

I hope you can see and agree with me that it is now the time to commit to your forex trading future.

We have some more preparations to do and have decided D date is Wednesday December 8th, 2011.

Kind regards

Dirk

PS: Just a thought. You don’t have to be “slow”, the programme is flexible for you to do it at a brisk pace.

PPS: Another thought, some people really need the “personal” mentoring. That’s still an option, with low acceptance requirements until 31 December for Personal mentoring Class of 2011.

In April 2010 the annual FX Street Trader of the Year 2010 contest was launched.
The 2007 winner and runner up, and the 2009 winner were my clients, BWILC owners & people I had mentored.

This year I decided to see if this was just luck.

So I put out a challenge.

“My guys” can dominate this competition and I can prove it.

I put my trading philosophy and for all practical purposes my business on the line.

I didn’t intend to send a seasoned A team of mentoring clients to this challenge.

No. I would send newbies.

The FX Challenge Preparation Programme

In order to prepare participants for the “FX Challenge” I took important sections of my personal mentoring programme and reworked them into a new non-personal programme.

We had about three months to prepare for the FX Challenge and the FX Challenge was a live account trading competition that lasted for 8 weeks.

I said at the time that it is important to know that there can only be one first prize winner but there can be many winners if you use the competition correctly.

When I pondered the content of my first attempt at non-personal training I decided to skip the very important first phases of the mentoring programme and go straight to the 4×1(+1) strategy and the median trading methodology.

Group wisdom with guru sauce.

Like in my personal mentoring programme I gave the participants tasks to complete and then I made compilations of their responses, I responded in the compilation document to some of their questions and added some corrections and made some additions and general remarks and then I provided the compilations to the participants.

While this was happening I also provided them with a Weekly (Monday) Briefing and some of my other Daily Briefings and market summaries. Obviously one of the main issues for newbies is “what to use” and what not to use. What to ignore and what to incorporate? I helped with that.

There was a discussion forum where I encouraged discussions of the issues and made my own contributions. Here I posted several relevant articles I thought would be useful, always keeping in mind the problems of information overload.

This is the only way you can teach relational analysis. Real-time.

I also added a “trade reporting” function. Everybody could report their trades on a daily or weekly basis and add maybe a few notes about the rationale of what they did. This was really a hit. And it contributed a lot of value to see what others were doing and how they went about implementing their 4×1(+1) strategy.

The FX Street 2010 Trader of the Year Contest

The following numbers are approximations. I have not tried to verify the details.

There were around 240 registrants in the live trading competition. I have no idea how many eventually did trades. Of these about 60 (25%) were my clients (FX Challenge Preparation Programme & Class of 2010 mostly).

As far as I could see of these 60 about 20 eventually did some trading in terms of the competition. (I was completely hands-off during the competition.)

The results of the competition after 8 weeks of trading were:

• First: Michael Edwards – FXCPP with 36,20%
• Second: trader (Trader8) – with 35,32%
• Third: Jairo Sérgio Castro Vasconcelos – 32,27%
• Fourth: Pipper – FXCPP with 25,85%
• Fifth: Gimsa – Class of 2010 13,90%
• Sixth: Roy Mann – DrFX MP 12.75%

Yes, my guys got #1, #4, #5, #6 (and also #7 (-12%), #9 (-27%) and #10 (-33%))

TOTAL DOMINATION

Before we analyse the above let me just explain the following:

These results have a survivorship bias. It means the records of the people that fell out aren’t included. What practically happens in a competition like this is that some traders once they begin to lose or lose track of the front runners stop participating and updating their records.

The BWILC trading strategy is hands down better than the rest.

The BWILC strategy absolutely stood out with the number One and 70% in the top 10.

Now let’s consider some forex market conventions.

Ninety percent of traders don’t make it in a relatively short time; 240 initial participants; only 12 made it to the final scoreboard; 12 / 240 = 5%; 7 of these 12 were “my guys”.

MY GUYS DOMINATED THE 5% WHO MADE IT

Roughly one third of “my guys” who eventually did participate ended up in the 5% who made it.

This doesn’t mean you must just show up and you will be a winner, one of the 5%. No sir. You have to apply the principles, stay the course and do your own thing. But you can have comfort that in the 4×1 (+1) strategy and with the guidance of my relational analysis expertise and the support of a group of like-minded traders you have put yourself fundamentally in a sound position to become a winner yourself, one of the elusive top 10%.

The FX Challenge was a training experiment

• Firstly I wanted to see how I can implement a non-personal trainnig programme. Considering the results I am very happy.
• Secondly I wanted to see if I could handle a large number of participants efficiently in a non-personal programme. I found I could easily handle these 100+ people in addition to an overflowing Class of 2010.
• Thirdly I wanted to see if non-personal coaching, focused on in depth work on the 4×1 strategy and median trading methodology and some relational analysis guidance would produce good trading results for the participants. It did.
• Fourthly I wanted to test an important theory I had developed regarding the whole concept of “learning to trade” and “doing training to trade”.

My theory is the following:

Most people fail because most people don’t understand what trading is actually about.

They are not really ready at the time they start to trade. They have very short term goals, very high expectations, they use simplistic analysis, and they rely on short training courses hoping to achieve miracles.

What happens in the market place, dominated by marketing wizards, is that training is offered, ‘now!’. If you don’t buy now, you will miss the opportunity. So people buy now, irrespective whether they are really ready.

I came to this conclusion by evaluating the dynamics of my mentoring programme participants.

I usually have a “marketing trigger”, like BWILC 2010. With the release of BWILC 2010 I offered some special deals for my Class of 2010.

In every group, without exception, including the Class of 2010, there is an unacceptably high percentage of participants who simply don’t get out of the starting blocks.

I was very interested to see how this dynamic would pan out with the FX Challenge Preparation Programme.

The outcome was the same: there was an unacceptably high percentage of participants that didn’t use the opportunity as presented. They were not ready. Or they were interrupted.

Even if you are ready you have to consider the possibility that life may interrupt your progress. There was the classic and tragic example of one of my mentoring clients being part of a hurricane that destroyed part of a small US town. House gone, one month into the programme.

Apart from the potential that you may be seriously interrupted by life there is the major question, ‘how do I know I am ready?’ But the answer is evasive. You can’t really know.

Here is my adapted theory:

Anyone that can start and then trade successfully without training was actually ready when he started.
Everybody else needs training.

• For training to be effective the core training must be taken when, and only when, the trainee is ready.
• The training must accommodate the fact that the trainee may not be sure if he is ready,
• may be ready now but circumstances can change drastically and quickly and
• the trainee may be deluded that he indeed should be trading at all.
• In addition the training must be comprehensive and purpose driven.
• It must include a thorough understanding of the market dynamics and fundamental drivers, ie the fundamental backdrop against which the actual trading and implementation of a specific strategy and specific methodologies take place.
• The trainer must have the trust of the trainees.

During the next few days I am going to invite you to join my new non-personal training programme.

This programme is specifically designed to accommodate all the shortcomings in training programmes and trainees’ tendency to buy when they are not really ready.

I call it the Slo(w) Gro(w) to Pro programme.

Nothing like this is available anywhere.

I don’t believe anyone else has ever put so much thought into the training of Mom and Dad traders.

I am absolutely convinced I have now added the training model that is worthy of the BWILC trading strategy which has dominated the most prestigious international trading competition since 2007.

Tomorrow I will reveal some more exciting news related to the new Slo Gro to Pro mentoring programme.

A few years ago two Harvard psychologists studying perception and observation did a famous experiment.

They set up a basketball court with two teams of people passing basket balls around. The one team had white T shirts, the other black. They made a video of this.

The video had a twist.

At some point a student in a full gorilla suit entered the court, stopped, faced the camera, beat its breast and left after spending nine seconds on the court.

The researchers then showed this video to Harvard students and asked them to silently count the number of passes made by players in white T shirts only.

After the video was shown to students they asked them if they saw anything extraordinary?

Half of the students didn’t see the gorilla.

The experiment has since been conducted many times with diverse audiences in different countries and the results are universally the same.

Almost half of the people don’t see the gorilla entering the court, facing the camera and beating its chest before walking off.

Say the authors of “The Invisible Gorilla in our Midst”:

When people devote their attention to a particular area or aspect of their visual world, they tend not to notice unexpected objects, even when those objects are salient, potentially important, and appear right where they are looking.

The fact that people miss things is important, but what impressed us even more was the surprise people showed when they realized what they had missed. … The gorilla study illustrates, perhaps more dramatically than any other, the powerful and pervasive influence of the illusion of attention: We experience far less of our visual world than we think we do.

The researchers then did a comprehensive poll asking people if they think they will see unexpected objects while focusing on something specific:

75% of people thought they would.

Our vivid visual experience masks a striking mental blindness…

The idea that we can look but not see is flatly incompatible with how we understand our own minds, and this mistaken understanding can lead to incautious or overconfident decisions.

Please read that again while considering charts, patterns, indicators, trades and trading strategies …

The researchers got a Nobel prize for their work in 2004.

People have a way too optimistic outlook on their ability to see things.

We don’t see unexpected objects due to a lack of attention and this error of perception is known as “inattentional blindness”.

Critique that people who missed objects didn’t really look at them was refuted by a German researcher using eye tracking software.
In the gorilla experiment both people who saw the gorilla and those who didn’t, looked directly at the gorilla for about one second.

With these insights we turn to forex

So what does this mean for forex traders, especially chartists?

The experiments also prove that if you don’t look at something you can’t see it.

This is profound (and like the gorilla afterwards pretty obvious) for chartists.
If you look at charts for certain “patterns” you will definitely never see other “patterns” you are not looking for.

Further experiments have shown that if you already have expectations of what your are going to see, you can miss the most glaring unexpected objects. If you are told there are yellow and blue arrows on a screen and you are told to look for the yellow arrows you will see yellow arrows, unexpected yellow objects, blue arrows (that are also present) but not unexpected blue objects.

In a very literal sense you might not see what your charts are telling you because, if I can hark back to my previous post, you might be looking for a continuation of a trend (like euro to zero) and altogether miss a massive reversal in the works.

Exactly how analysts for weeks since 7 June 2010 only saw a “corrective bounce” and not a significantly changed trend.

But I want to go a step further.

I believe there is one huge gorilla in Mom and Pop traders’ midst.

Mom and Pop are so conditioned to look for precise entry (and exit) signals that they miss literally hundreds of trading opportunities that are right in front of their eyes, created by the very same qualified randomness of price action that render the “precise entry and exit signals” generally useless.

If you look for Fibonacci signals you will probably find them but not moving average cross-overs.

If you look for the latter you won’t see Fibonacci signals, or pivots or indicators or heads-and-shoulders formations or breakout or pivots or devils forks or, or, or. …. But they are there! Thousands of others search for them, find them and use them.

Follow closely:

The very fact that thousands of people will see hundreds of signals they are looking for have some important consequences.

These (consequences) are a mainstay of my whole approach to the market.

Apparently there are so many tradable signals it’s not worth spending your time toiling on finding a specific one. Thousands of people are going to miss it in any case as they are not looking for it.

Here’s the punchline:

These thousands and thousands of others are looking for something else – another signal, pattern, indicator, magic moment to enter.

And apparently they find it because there are millions of trades being done every day.

This very fact make your efforts slightly ridiculous. (Sorry. No offence. Just true.)

To me it seems that what people believe about their very special price entry and exit points are spectacularly ordinary.

The fact that most people do this and lose, tells me the search for great entries and exits is a gross waste of time.

There is absolutely nothing special to that special signal you make a highly leveraged bet on.

You can just as well chose a certain price of a currency for totally arbitrary reasons, like its last two digits as the last two digits of the year of your birth, enter a trade and see what happens (add the sauce and spices of your money management / risk management call it what you like.)

The fact of matter is that an entry point for a specific trade in a proper trading strategy is a very small cog in the wheel.

The problem is that the trading strategy is wrong, not the entry.

Let me repeat that:

The problem is that the trading strategy is wrong, not the entry.

A trading strategy which rely on technical analysis of historical prices on an intra day level to pinpoint exact entries and exact exits, devoid of a fundamentals context, subject to a normative risk/reward ratio like 3:1 or 2:1 (forcing / demanding close stops) which lead to highly leveraged trades relative to capital is fundamentally flawed.

Unfortunately that is almost exclusively how Mom and Pop traders trade.

In place of this I propose my 4×1 (+1) strategy.

In May this year I challenged “the market” by suggesting if you put proponents of the ‘fundamentally flawed strategies’ in a competition with proponents of my 4×1 (+1) strategy (newbies, who I have trained) ‘my guys’ will beat the rest hands down.

The challenge was accepted and the results are available.

Tomorrow I’ll tell you what happened.

Have a look at the Invisible gorilla video:

http://www.theinvisiblegorilla.com/videos.html

Test yourself with the “monkey business” video!

In this short series of blog posts I am looking at important changes in the forex trading space.

I made the point that most beginners can’t do pure technical analysis. Their charts must be named. Why? Because of the need to put it in the context of fundamentals and market dynamics. Experienced (professional) technical analysts generally do this ‘subconsciously’ – automatically. They have a contextual understanding in which they embed their analysis to interpret it and make sense of it. As a result they can see, hear and feel the charts imparting sensible messages.

It goes without saying that beginner traders don’t have this. Yet, instead of doing pure analysis, just with the data, they want the names, they want to embed it but they don’t have the fundamental knowledge and understanding of market dynamics to really see, hear and feel the charts. And this is why the majority of traders fail.

They have, due to this impenetrable convention that technical analysis in ultra-short timeframes works, things upside down. Marketing wizards needs trades. They have designed, shaped and formed this forex space to efficiently get Mom and Pop traders to trade in the most efficient way for them (the marketing wizards). So everything from the point of view of the new Mom and Pop trader is upside down, wrong side first, inside out.

Thus you are bombarded with the idea that your entry ticket to successful trading is technical analysis of intra day charts.

In reality your entry ticket should be a thorough understanding of the driving forces behind currency prices and the market dynamics these forces unleash. Both in a macro and micro context.

My objective in these blog posts is to show you that in order to make serious progress in your forex trading you need to enter into an elevated and continuous discussion with me regarding these driving forces behind currency prices and the market dynamics they unleash.

Once you understand it your charts (if you still need them) will be speaking volumes in clear, crisp language to you.

You will see things that have always been there but that you just missed.

Today I am going to give you a taste of what this means.

Click here for more on forex hurricanes and typhoons

The majority of people who investigate forex trading want to make money by trading their own funds. That is the business they want to enter: Making money by buying and selling foreign exchange.

Like anyone considering a new part-time / full-time business venture there are a series of questions one asks at the beginning. What can I make? What must I invest? How much time? How do you do it?

It doesn’t take the newbie on the forex block long to realize that in trading things sound much easier than they really are, and most leave with a hole in their bank account and a dent in their pride. Stats suggest that only one in ten make it, and even that may be pushing it.

The defining characteristic of the retail forex industry when it was born between 10 and 15 years ago was that it brought a lucrative market for banks, institutions and high net-worth individuals to the Mom and Pop level.

It brought dreams of big money to people with little purses.

It brought Wall Street to Main Street.

STANDARD LOTS

In the beginning this was all possible because of leverage. Forex brokers required only 1% margin and retail traders could experience the exhilaration of trading 100,000 units of major currencies with a few thousand dollars in a trading account. Pip values were generally about $10.00 per ‘contract’ and 10% – 50% profits in a day could be achieved (if luck was on your side).

The business model was a simple one: a forex broker is a liquidity provider and under ideal circumstances will ask no fees (like stocks and futures brokers) and will make his money from the difference between the bid and ask spread. With spreads from five to ten pips brokers could theoretically make $30 to $60 per minimum trade.

The business model had one serious flaw:

Mom and Pop burnt through their few thousand dollars in less than a month on average and after that they were too scarred and scared to commit more money.

WINDS OF CHANGE: MINI LOTS

So the mini lot was introduced by brokers. Reluctantly.

There were all sorts of penalties for trading mini lots. There were limitations on the size of the account. There were commissions added. There were roll-over costs on both sides of the transaction.

But a professional marketing wizard is very valuable for a business and they excel at finding the metrics and work the numbers and soon the mini account became all the rage! (Note the difference between “mini lot” and “mini account”.) Where earlier brokers basically put people off from trading mini lots they completely changed course and began to encourage the mini account.

$500, $300, $200, $100, $25 and off you go – creating financial security with your forex trading account! A huge storm in a small tea cup.

And the marketplace bought this lock, stock and barrel.

With the mini account came the maxi leverage.

100:1 no problem, 200:1 now you’re talking; 400:1 positively perfect; 500:1 for serious traders only. Small became BIG!

But wait, that’s not all.

SUBTLE CHANGES

If you have been in the industry for a decade like I have, you instinctively pick up subtle changes. With the release of BWILC 2010 almost a year ago I made the observation that the market has changed in a very important way: the market was not spending the amounts of money it did before. I realized from the goals and the projected live account values of mentoring clients that the market has brought down its investment size in forex trading significantly.

People were not prepared to risk the amounts they were risking a few years ago in a trading account.

For the marketing wizards this posed a specific challenge which needed an ingenious response otherwise they would soon be out of business. There is a 1000% drop in the income from a 100,000 lot spread to a 10,000 lot spread. You need ten ten thousand lot spreads to make the same as one 100,000 lot spread. (That was one of the reasons why on the mini accounts the leverage was increased up to 500:1 because a trade at 500:1 on a mini account made the same profits for the broker as a 50:1 trade on a “standard” account! Again – Small is BIG.)

But more problematic was that as the market opened up and competition became a factor the easy money from wide spreads disappeared. Spreads became very narrow. Non-dealing desk marketing wizards were pulling a fast one and ate into the market share of the “dealing desk” brokers and ECNs who were also fighting for market share. Everyone was slashing spreads, a critical source of revenue.

In the mean time the cost of marketing via the main channels like Google, Forex forums and Forex portal sites and Introducing Brokers increased tremendously. On the one hand it became very expensive to acquire a ‘paying customer’. (Someone opening a real money trading account). On the other hand the typical account became smaller and commensurately the revenue from the account in terms of the spread.

One insurmountable problem remained: the customers kept losing money and their accounts at a high rate and many didn’t come back and refund their account. Often they see the broker as the problem and if they did come back they went across the street to some other broker offering even lower spreads, lower margins, lower deposits and lower transaction sizes (but higher leverage), bigger first deposit bonuses and bigger trading competition prizes.

Welcome to the world of micro accounts and micro lots.

WINDS OF CHANGE: MICRO ACCOUNTS

One thing hasn’t changed at all. The fallacious idea that you can trade BIG with a small account. Yes, US regulation has reigned in the leverage to 50:1 but consider this: If you make 100 pips with a 50:1 trade on a micro lot (1,000 units) you have made profit equal to 50% of your account ($500) assuming your account was $1,000.

The lure to repeat this and go from micro, to mini, to macro to millionaire keeps people coming back.

“If I can make 50% on $1,000 in a day I can make 50% on $10,000 in a day and after a short period of time I’ll be trading with $100,000 and make 50% on that” is typical thinking.

How BIG small became recently is illustrated by the fact that one of the most prominent marketing wizard forex brokers (in my opinion the leader of the marketing wizards), has now realigned their whole approach to channel all business through a “micro account’ site!

I wonder what it says if the number #1 marketing wizard comes to the conclusion that it is better to lure tens or hundreds of thousands of miniscule accounts rather than thousands of mini accounts? Small became BIG, big time!

(It is common sense if you ask about a minimum account size (deposit to make) the first offer you hear becomes an anchor from where you work – just like in negotiations. So why would they anchor it at this most basic bottom-scraping level of $50?)

I am pretty sure they have the statistics to back up why it will work for them.

But I can tell you this from my experience as a forex mentor of ten years. Time is money and to trade is hard and there is no way that any individual is able for a long time to fool around with the up and downs implied by hocus pocus like 2:1 or 3:1 risk – reward ratios (sold by the marketing wizards in their free training packages) and the best he will make out of it is a fistful of dollars over a ‘long’ spell of so-called “successful trading”.

This you must know: Trading fatigue is a reality.

Most people have way too high expectations of trading. They want to make lots of money fast. If they don’t they drop out. If that is you, the odds that you will drop out are very high. The person who stays the course through thick and thin, who can bide his time and pace his business venture, is the person with the best chance to make it in trading.

Almost everything you can imagine related to forex trading is supportive of the “make lots of money fast” mindset. In other words: try it again and again and again. If it doesn’t work you haven’t lost anything. Move on. Ten years ago you lost a few thousand dollars in the first effort.. Today you have lost only a fist full of one dollar bills … and a life changing opportunity?

But what happens now is that many people at this “small is BIG” level come back regularly and repeat the process with high leverage, over-trading and reliance on useless intraday “analysis”.

They are locked in to a never ending process of high excitement but absolutely no chance of sustainable success.

They are trying to repeat Big Profits for little effort and little money down, by becoming an “instant success”. (That is to feel successful within weeks of even beginning to trade.) This is what you get sucked in to: You can do trades that deliver relatively extraordinary rewards measured against your account. You can repeat this. You can amplify this by depositing more money in your account. But the one big trade at a time (with a close stop) remains constant, if you can just find the right ’strategy’ for those pinpoint entries …. (and your friendly broker offers hundreds of strategies for you to chose from)!

This is the key … you must challenge the “instant” mindset created by the new “small is BIG” paradigm.

You may lose small change only but with that a BIG CHANCE in your life, namely the chance to develop a real sustainable strategy that can indeed lead to the financial rewards you want.

Kind regards

Dirk

In my next blog post in this short “Winds of Change” series I am going to talk about winds of another kind: Typhoons

In January 2010 the US regulator of retail forex trading, the CFTC, threatened to raise margin requirements 1000% and consequently drop the attainable leverage from 100:1 to 10:1. At that time I have posted on my blog that it is a done deal, the regulator will increase margin requirements substantially, irrespective any protests and people should rather focus on trading within the lower leverage environment.

Fast forward to 21 July 2010 and the announcement of the Dodd-Frank Bill which is supposed to regulate “Wall Street” and what do we see?

Retail forex trading in the United States, and for United States residents, experienced a paradigm shift with the lumping of retail forex regulation together with regulation aimed at the “too big to fail” banks after the financial catastrophe and bailouts of 2008.

The general gist of the Dodd-Frank law is that

from 18 October 2010 US brokers with subsidiary offices outside the US with US resident clients had to ‘migrate’ those US resident clients back to their US based head-office operations.

In addition to this, as from July 2011, only US regulated entities will be lawfully offering retail forex transactions to US residents. It is unclear and a point of contention if it will be possible to enforce this globally since US legislation isn’t global legislation. Some US resident traders believe it is unconstitutional. It meddles in the private affairs of citizens and they are consequently looking at offshore options to keep their trading accounts away from US regulation.

This goes much further than leverage. I have explained earlier that anti-hedging regulations made in the US during 2009 were the direct cause for US brokers to provide facilities at their non-US offices to bypass these regulations and that these regulations also had an impact on my 4×1 strategy and median grid methodology. Consequently we advised clients to open their accounts at US brokers’ offshore offices where they could trade without these restrictive and adverse rules.

This latest regulation however attempts to force all US residents to trade at US regulated entities only and US regulated entities are all subject to the adverse conditions of “no hedging” and “FIFO” trade execution.

For a while this appeared to be an insurmountable problem and it meant that US residents may not be able to trade the lucrative 4×1 strategy optimally because things like FIFO execution makes it difficult to “naturally” trade the 4×1 strategy in an optimal way.

Here is a short explanation why:

There is hard evidence to believe that a “one big trade” entered at a precise intraday price point with a close stop and some fanciful risk:reward ratio like (3:1) is not the cure but rather the cause for unsuccessful trading.

The 4×1 strategy is essentially a diversification strategy where instead of one big trade at a precise price point, several small trades with a directional bias are made over a wider price range with no concern for precise intraday turning points. We call it a multiple entry (position) strategy. Due to the directional bias and the characteristics of very short-term price behavior the optimal application of this strategy implies the use of hedging from time to time as well as per ticket execution.

A FIFO (First-in-first-out) execution model makes it almost impossible to effectively trade in this way.

After some research we came to the conclusion that some US brokers had systems in place to apply the one exception to the F-I-F-O rule and consequently it is still possible to apply “per ticket execution” at some US brokers without contravening the new regulations / law and trade the BWILC way optimally.

In order to apply the 4×1 strategy and methodology optimally it is critical that you (US residents) trade with a broker that offers this facility (per ticket execution). I have identified some brokers where this is possible. However the problem of hedging still remains. In order to hedge with these brokers you will have to open and fund a separate account.

I am sure you would like me to immediately spill the beans and give the names of the brokers I have identified. I promise I will do so in the very near future when I reveal the successes of my recent experiment to adapt my training model and offer a unique training model not available anywhere else.

I have forever been a proponent of the introducing brokerage model in terms of which I can teach you to trade optimally and benefit in the long run from your ability to indeed trade..

Unfortunately with respect to US residents (except those who will chose to remain or go offshore due to the scope of US regulation) I will not be able to offer the introducing business model anymore, since I am not a registered US IB.

However my most recent research confirmed some ideas regarding “learning to trade” I had developed over the last ten years in this industry and I want to ask you to seriously consider the training model I will put forward very very soon.

Just as my personal mentoring programme was unique and a resounding success for a majority of participants my new training model (which will not only be for US residents, but for everyone) will be unique, calibrated to cater to only those who are serious about the business of forex trading (or not!) and above all extremely cost effective (in all different implications of ‘cost’) – as they say “time is money”.

Look out for a blog post: Forex Winds of Change 4: A New Training Model but first I am going to share with you some other interesting observations I have made in Forex Winds of Change 2: Storm in a tea cup. Small is BIG.

Dirk du Toit
18 November 2010

PS: My Personal mentoring training model will continue for those that are ready for it. However I will offer for one last time “easy access”. Personal mentoring is extremely time consuming for me and I need to limit the entries and in the near future enrollment requirements will be much higher. Have a look at the current details here in order to make your decision about becoming one of the members of Class of 2011 while entry requirements are still low.