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Futures, Forex and Stock Market Education: What Type of Returns are Realistic?

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It’s no surprise that people email me asking what type of returns they can expect if they get a good futures, Forex or stock market education.

This is asked by those doing swing trading, day trading and long term investing alike. It’s asked by those trading Forex, futures and those trying to learn the stock market and doing stock market research.

It’s a natural question to ask. But trading is a bit different than getting a job that pays a consistent, reliable wage. So the first thing that must be said is that most people who start a trading business do not succeed. On the other hand that is actually true of any business, not just trading.

Of course we wouldn’t become traders if we didn’t think we could beat the odds and become successful. So the next question would be: “How much can a successful trader expect to make?”

I’m not aware of any universal statistics available on that topic, but I can guide you to some resources I know that track trading results. To the best of my knowledge they are objective and reliable.

The first resource is Barclay Hedge (www.barclayhedge.com).

They have statistics each month on the managed futures performance of the top 10 traders managing less than $10 million, and also those managing more than $10 million.

To get the statistics you have to register at the site, but registration is free. Also if you subscribe to Active Trader magazine, they publish the numbers every month.

The second resource is Futures Truth Magazine (www.futurestruth.com).

They track the results of automated trading systems and publish several “top 10” lists.

In observing the lists, one interesting fact is that only 1 out of the top 10 systems for the past 12 months is also on the top 10 systems list since their release date.

This is why everyone prints the disclaimer: Past results are not necessarily indicative of future performance.

That statement if found on every ad for a very good reason. It’s true!

A third excellent resource is the “Market Wizards” series of books. Reading even just one of these books will give you a realistic view of what successful traders have had to go through to reach their stature. [disclosure: this is my affiliate link to Amazon.com]

The “secrets” to becoming a successful trader are not secrets at all. They are well known and documented, but rarely followed. I’ve had many conversations with traders who have asked me the secrets of success, only to have the conversation end with them saying, “I know all that stuff already, but what’s the real secret?”

This supports my belief that “knowledge is NOT power.”

The “power” lies in the DOING.

Did you find any of these 3 resources helpful?

Do you know any other good resources about the reality of trading and what it takes to achieve trading success?

Please post a comment below.

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Trading Psychology: Are You Taking Trading Too Seriously?

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Here’s a great video about trading psychology, even though it’s not directly about the stock market, futures or Forex, and doesn’t reveal any day trading tips. But it does contain a secret most traders are violating every day.

Trading is a great business. I love it, I’m passionate about it, and it is so much fun that I’d do it even if there were no money involved.

But it’s not just me. We traders are a passionate bunch.

We spend a LOT of time reading, studying, trying different indicators, tweaking indicators, testing various strategies and looking at chart after chart after chart.

And then you add the money factor – and well, we can get to be a bit obsessive (just ask any trader’s spouse!).

Work ethic is good, and it does take a certain amount of experience in the markets to become successful. The problem arises when you take things TOO seriously. That causes a block of your mental and emotional energy. And in extreme cases, it can have negative consequences in the rest of your life.

This video isn’t about trading. It’s about life. And therefore, it is about trading.

Enjoy, and leave a comment below with your reaction to the video.

Do Chart Patterns Forecast the Future? A Look at an Overloooked Market Cycle.

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One of the most popular trading methods is to look for Chart Patterns. In fact, some people claim they trade these alone, without the use of any indicators.

But amateurs know these same chart patterns (head and shoulders, double tops, double bottoms, triangles, wedges, etc.) and cannot make money with them.

So why don’t they work?

Or do they work … but only sometimes?

Today’s post will cover a cycle I’ve never heard anyone else ever talk about before:

Order/Chaos Cycles.

Whether you trade chart pattens, or indicators, or some combination of both, the cycle between order and chaos will have dramatic effects on your profit/loss column. Yet most people aren’t even aware it exists.

Well, today you will get that awareness!

I’ve recorded this post in Podcast format (audio only). You can download it to your mp3 device or listen to it right here on the web site.

Thanks everyone for the great feedback on this series on Market Cycles. If you haven’t been following it, you can access the previous posts in the series below. It’s been fun doing it, so I think I’ll do more series like this in the future.

Listen to the Podcast and then please leave your comments below. There’s some things in this one that are going to be pretty controversial, but feel free to express your feelings even if you disagree with me. That’s what makes it fun!

The Podcast is below. Be patient, it’s almost 30 minutes long so it may take a long time to buffer before it starts playing. If it continues to buffer too long, click on the “Download” link below it (left click to play on your computer, right click to download the file to your computer).

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Buying Stocks, Futures, Forex During Volatility Market Cycles.

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Buying stocks, forex or futures during high volatility market cycles may lead to the opposite result of what you’re looking for. Stock market research indicates that the best time to buy stocks may be before a stock market trend, when you have rolling stocks, channeling stocks or other contraction price patterns.

So today we continue with our series on market cycles by covering expansion/contraction cycles.

As usual, the “retail” trader usually times these cycles perfectly wrong!

Learn about these market cycles and how to time them like a professional trader.

Although I use a stock market reference here (and the chart is one of the stock market) everything in the video can be applied to Forex, futures and commodities as well.

Enjoy the video and please post your comments/feedback below.