The advice in here is from my personal experience but I am sure many traders will find these lessons useful so let's take a look at them. In 1985 I got my first job in finance, as a commodity salesman and got my first lesson about trading the markets:

The Shattering of an Illusion – So Called Professionals Lose Money

I must admit, I felt a bit intimidated by the world of finance and had seen brokers on TV and in the press and believed that they made money like most of the public do but nothing could be further from the truth. The brokers who traded their own accounts or ran client discretionary accounts lost money quickly. In fact, as a sales force we were brining in money one month for most of it to be lost within a few weeks and the sales team was failing to keep pace with the equity being lost.

I learned at this time, that brokers worked on the basis of making as much commission from a client as possible and their strategies were based around short term day trading or scalping. The phrase used was “churn and burn” to turn as much of client equity as they could into comission. This was seen as a normal way of trading and the view was - the client will lose anyway so why not make as much commission as possible while he lost. No point in giving all the money to the markets, when the company could take it for salaries and expenses.  This view is not dead 25 years later. Brokers still fail to make money for themselves, with their so called expertise, complex trading strategies and systems. We looked at the fact in another article, that you would have had a better return in a T Bill than in the average Hedge fund since 1998 but their commisisons, were more than client losses!

Never believe in the myth that bank hedge fund or FX brokers make big profits for themselves – they don't so never trust expert opinion again. Learn currency trading yourself, keep it simple and never feel intimidated by others.

Common Sense is not so Common in Forex Trading – the Power of Greed

Many people are totally sensible in their normal day jobs but when they trade Forex, common sense goes out the window. I have seen sensible people who have high profile jobs as Doctors or Lawyers suddenly believe, they can make money with no effort, believe short term trading strategies work, there are hidden codes to market movement or markets move to scientific algorithims, when they clearly don't and they lose money. Greed is a destructive emotion and greed, overcomes common sense when trading Forex in terms of people who have above average inteliigence.

Money Management is the Key to Success

Its a boring subject but the fact is any trading system will fail without proper money management. This means, trading with low leverage and stop losses which are outside of the random noise of market fluctuations. If you do this, you will not stopped out to quickly but have a stop loss which is close enough to give protection but far enough away, to stop you getting knocked out the trade to quickly. Always expect the worst case scenario and things can only get better.

Every time, I have forgotten to place a stop and run a loss, I have lost. Every time, I have gone for a sure fire trade with to leverage which is to high I have paid dearly for the mistake. Someone once said - if you want to win at Forex trading, make sure you play great defence first and protect what you have and this statement is one of the best to use in your trading strategy if you want to be a successful currency trader. There are many ways to make profits but only one way to lose which is to have poor money management parameters and rules.

Long Term Trading Beats Short Term Trading in Terms of Profit Potential

I have said it throughout this site but its worth stressing again – short term Forex trading techniques don't work,are a waste of time and energy, so leave scalping and day trading to losers and focus on trend trading longer term or swing trading short term moves. Never take a trade and look to liquidate it, in a time frame which is less than a day – its the ultimate losers trading strategy.

Patience – The Importance of Sitting

One of the most underrated traits in Forex trading – by sitting and watching, you wait only for the best trading signals and it really is the best way to trade currencies. You don't earn money for the hours you put into your trading plan but simply, from the results of your trading signals. Any trader who is patient will make more money than one who trades for the thrill of trading the markets.

Forex Trading is a Mind Game

In Forex trading you will soon learn that the basics of trading are simple to learn but success can be very elusive and this really is nothing to do with your trading method – its to do with you.

Its been said by nearly all the great traders that control of the mind is necessary to win. You need to block out negative emotional inputs. You need to be logical and disciplined in your mind to make your trading strategy make money. The basics are easy to learn in a few weeks mastering your mind will take a while longer and this is because, you have to feel trading and the emotional pull to realize how powerful the negative inputs are on you, to get control of them and develop a disciplined mindset. 

Don't let anyone tell you that the basics of Forex trading are complicated to learn – there not and simple trading systems make profits. The key is to focus your mind, in the right way to make your system, give you the profits you desire. Your system cannot do it on its own and you will need to make profits come to fruition by following your system rules in the correct manner.

Always Expect the Unexpected and be on Guard

The trade set up you think looks the best often turns out to be a dog and the trade which no one else agrees with and you feel uncomfortable taking, often works out to be a big winning trade. See all trade set ups the same, in terms of profit or loss potential if they line up with your trading system rules. Also, never feel more confident after a winning streak or less confident after a losing streak both winning and losing streaks end - so don't be to nervous about taking a trading signal when your losing or to confident, about taking a trade when your winning – always be on your guard.

Your on Your Own

Forex is a lonely profession. While you can learn from others, the actual execution of your trading plan and strategy is down to you. No successful trader follows others because, you need mental strength to trade trading signals and cut losses, run profits or gear up for the big profit opportunities. People who follow others never achieve success so don't try – be on your own. Don't give or take trading advice, isolate yourself from opinion and if you do this you will be able to think clearly and trade in a disciplined fashion.

The Importance of Accepting Your Imperfection

You can only be wrong and the market is always right and this is hard for many traders to take emotionally and it causes them to make trading mistakes which involve trading to much or using to much leverage to get revenge on the markets. They simply cannot accept losing and personalize the market and want revenge on it which is stupid. They get angry or frustrated with it when they miss a good trading signal, get stopped out to soon or take a profit to early. The market is impersonal and you need to see it as a higher force – it will give you profits but you can never be perfect and never beat it – treat the currency markets with respect and you will make money which should be the sole aim of trading Forex.

Final Words

I hope you enjoyed, the most important currency trading lessons I have learned over the last 25 years and I am sure, anyone who has traded, will agree with most or all of the above lessons for trading success. If you want to learn currency trading, you will understand from the advice above that you or anyone has the potential to make money. 

All you need is a trading method which is simple, logical and one you believe and have confidence in and then, the rest is up to you in terms of - your emotional self control and your ability, to trade with discipline to achieve trading profits.