Inside the Tortoise Strategy

Establishing a Winning Forex Trading Formula

Now we are going to begin building our concept of how to become successful in Forex Trading or currency trading.  If you are new to Forex Trading then you might think that the goal is to be right most of the time.  You might think that the way to be a successful trader is to win most of your trades.  This is not the winning formula.  As you will learn, Bill can win 80% of his trades and still lose all his money.  At the same time, Mary could lose 80% of her trades and still make money.  Read that again.  When you understand this thoroughly, you will understand the goal in your forex trading practices.  It is this one idea that will not only make a big difference in how you trade.  Having this paradigm shift can change how you view everything in life.  I think of it as shifting our thinking from being a person who is able to score a touchdown, or have a winning season, to now being able to win a Super Bowl.  You see, that’s what the tortoise knows so well.  It’s not about speed nor is it about winning one race.  The skilled trader knows it’s not about winning – it’s about a winning formula.  The winning formula for successful Forex Trading is 1. Probabilities  2. Money Management  3. Discipline.  As you will see, this is very exciting when you understand how the formula works.  Write that down and pin it on your wall.  Keep telling yourself that it is not about winning trades!  You are never going to win all of your trades.  Forex Trading success is about using the winning formula correctly.

Inside the Tortoise Strategy

Forex Trading Mindset – How Traders View the Future

Now I am going to talk about a concept of extreme importance.  It is very important to view the future realistically.  So here are some questions for you.  You get on a plane headed for vacation – do you know for certain that you are going to survive the flight?  Bill calls and says he will be at your house at 4 PM.  Bill has never been late.  Do you know for sure that he will arrive on time?  Do you know for sure if you will not commit a crime tomorrow?  Can you name anything that is going happen for sure one minute from now?  If you have a realistic view of the future, and your ability to see into it, every answer should be “NO.”  Whether something is probable to happen, and what we “know” will happen are two different things.  You will probably refrain from a life of crime, Bill will probably show up on time, and you will probably arrive safely to your plane’s destination.  Those are all likely to happen.  But the point is that you don’t know.  The reason why this is important is because in Forex Trading, we are learning to anticipate events.  When it comes to anticipating a future event, probabilities is all we have.  Whether it applies to Forex Trading or life, we need to have an accurate view of the future.  Having this in place, we can then develop our skill of anticipating a future event.  Thankfully, we have a great, time-tested example of this with airlines, as they have been doing this for decades.  Each time they put a plane on the runway, they are risking all of our lives and they don’t know what is going to happen.  They know planes go down… it’s just part of the business – part of life.

So how do airlines do this?  It turns out to be a perfect example for us to consider as traders.  What do airlines do to minimize risk and optimize the potential for a successful flight?  They do many things.  They inspect the equipment to make sure it is in good working condition.  They have regularly scheduled maintenance for the plane.  They file a flight plan.  The pilot and co-pilot have a flight check-list.  They also avoid taking off and landing in dangerous weather, such as heavy fog or a storm.  What I hope you take from this example is the mindset of a trader when it comes to the future.  Now that we know what we don’t know, we can learn how to use probabilities to our advantage.  Take a moment and write a forex trading comment.  What was your concept of the future?  Do you still think you know what is going to happen, or do you see more clearly now? Do you see how this applies to Forex Trading and your success as a trader?

Inside the Tortoise Strategy

We encourage our students to take 500 forex trades with a winning ratio of at least 65-70% operating with specific rules before opening a live forex trading account.  But that’s just the smart way to do it.  What do you think the hare does?

The Power of Leverage
As you saw in a previous post (Realistic Forex Trading Expectations Part , our example began with $300 in the account, and are earning at a rate of 20% per month.  Some people, the hares, may think this is way too slow, considering we would only have made $60 after a month of trading (20% of $300). But is this really slow?  By month 12, that money will have grown to $2229.03.  Make no mistake by focusing on “how small” the dollar amount is when you are first starting, look at the ROI (return on investment) that you are producing. We are not making $60 on our first month, we are making 20% return on our initial investment.

If you continue to do that, by the third year, you will reach around $177,000.  Now it’s not looking so slow, is it?  By now, you are very skilled.  You have become trained and confident in all aspect of the Forex Trading skill.

Now look at what $300 is in less than four years at 20% per month.

This is slow money, isn’t it?  It is if you have made a liquid million in less than four years before.  So the longer term view is better.  Naturally when you begin trading bigger numbers, the dynamics of your relationships change, you might choose to operate with less leverage and manage your trades differently.  But these are the numbers.  The real point is that this is how the tortoise really thinks in Forex Trading and every other occupation in life , and that’s why the tortoise has all the money.  The hare just moves from one opportunity to the next.  Most people want to know how much money can be made.  Hopefully, this gives you some idea.  Now you can do better.  I just think it is better to begin with realistic forex trading expectations.  Comments?  Do you see how the hare keeps outsmarting himself?  Do you see how all you have to do is think longer term approach, and you will actually get to your goal naturally?

Inside the Tortoise Strategy

When I was first learning this Forex Trading concept, my perception was quite different.  My goal is to show you the skills you will need to learn, but if you go and step on a land mine like this one, it can be game over for you instantly.

Example: I was crossing the Canadian border some time ago, and because of the heightened sensitivity on terrorism, the customs officers would from time to time, for whatever reason, go through all of your stuff.  And they did on this particular day.  The man who searched my things knew enough to notice that I was a trader, and he shared with me that a year earlier, he had taken a course, and a month later he opened a live account.  He then proceeded to lose $4000.  After that, he never traded again.  His dream was over, and I’ll tell you exactly why.  The emotional pain of that loss was so great, that to deal with it, he began rationalizing that Forex Trading was too difficult.  From his experience, he rationalized that Forex Trading was some kind of a scam; only a small percentage every get lucky enough to make money.  He believed that I was just one of those lucky few, and he had no problem with that.

But was he correct?  It is true that 80 percent of the people who open live Forex Trading accounts lose all of their money in the first 30 days.  That is true.  But it’s not because of any other reason other than they simply lack the skill to play the game.  You see, if this person had lost $50 or $100 or some amount of money that they were not emotionally attached to, he would still be trading today.  So know in advance that if you trade with money that you are not willing to part with – if you trade too soon, too fast, you can be emotionally injured, and your mind will run from that danger.  It can very well mean that it’s game over for you.  So be careful.  If you take your time, you should be ok.  Take a moment and write a Forex Trading comment or question.  This is an important idea.  Are you feeling like you are going to be the .00000012 percentage that can walk on water?  Questions?

Inside the Tortoise Strategy

Watch out for Land Mines
Land Mine #1: First of all, start small.  I have had phone calls with people who lost substantial money in Forex Trading with amounts ranging from $5000, $18,000, $50,000 and even $200,000.  Dear Forex trader, do not make this mistake in your Forex Trading career.  I know it seems like a simple idea, but if you can’t make money with $1000, how are you ever going to make money with $50,000?  It’s the same thing.  The most common reasons this happens is because:

1. People are emotional.
2. They think their success in another field will carry over to Forex Trading – it will not.

Doesn’t it make sense to begin Forex Trading with a smaller amount of money and demonstrate your success on a consistent basis before adding to your Forex Trading capital?  I hope so.

Land Mine #2: Whatever you do, avoid stepping on this next land mine.  You are proceeding into a Forex Trading world that gives you all of the power to choose, and it is almost limitless freedom.  To be consistently successful, you will be developing rules that you operate with.  But there is one thing, from the outset that you never, never want to do.  Never ever trade money unless you are willing to lose that money.  In other words, it needs to be risk capital.

Inside the Tortoise Strategy

As you embark upon this Forex Trading career, you will be better at Forex Trading and have a higher probability of success if life is working better for you.  And the best way to make life work is to make the time to do the little things that matter.  If you take the Hare’s approach to Forex Trading then you won’t have time for these things.  So taking a longer view of trading will give you time for your job, your spouse, your kids, and even something that you love to do.

I know I spent a lot of time on that subject, but really, how could I not when it is so obviously important.  My goal is to show you what is affecting your Forex Trading success.  This is a huge part.  For those of you who think this is common sense, take a good look around you and you will quickly see that it is not so common at all.

What are realistic financial goals?  First and foremost, start small and do not risk money you cannot afford to lose.  This is a golden rule when it comes to starting in the Forex Trading journey.

For a “skilled” Day or Swing Trader, 20% per month is achievable.  Notice  the word “skilled” in quotes.  Anyone can be a trader in 5 minutes by giving a broker their credit card.  But it takes skill to earn high returns consistently.  So make no mistake; when I talk about making 20% per month, I am talking about doing so as a “skilled” trader.  We will talk about those skills soon enough.  There are two big land mines that can kill your dream of making a prosperous Forex Trading future.

Inside the Tortoise Strategy

The final reason I’m going to give you for taking the long view approach in Forex Trading is really about living a great life.  What about all of those little things that make life great?  I have learned that the great secret to life is that Balance is Power.  And it doesn’t require much effort either.  When I worked with NLP for a while, I used a technique for identifying people’s values.  It was fascinating work.  We found out that people have about 6 core values, such as family, career, spirituality, health, and so on.  What is interesting is that when we asked them how they felt about each of those areas, we discovered that they didn’t feel very good about where they are at with most of them.  Then it gets more interesting when we asked them what they thought they needed to do on a regular basis to feel good about each of those things.  Would you believe that it takes less then 15 minutes a day to change how we feel about ourselves, just by doing the little things we think are important that we are not doing?  It’s amazing!  Just by knowing what these things are and having a plan in mind to support those values, you should see how it changes people almost instantly.  They feel simply fantastic.  And the reason why is because our values need to be supported, and we often don’t do that.  As soon as we connect with those value and support them, even if it is a plan, it is enough.  It’s like having a weight lifted off of our shoulders, and this is one of the great mysteries.  When we are asking “what is important?”, we are actually taking steps to support those areas.  How simple and how easy it is to make ourselves happier! If we let Forex Trading consume all our time and every part of our lives, we will not be able to have a happy and balanced life. So I urge you to take the route of the tortoise with me and pace yourself in growing as a Forex trader.  Learn Forex Trading at a pace that you can balance your life.  Leave us a Forex Trading question or comment.

Inside the Tortoise Strategy

Forex Trading is one of the best opportunities for personal growth. Let’s talk a minute about those folks who make big and fast money.  As we said, there is a tiny percentage of people who do this, but there’s something else.  Maybe you don’t know, or maybe you do, but you might have never thought of it this way.  Do you know what happens to more than 90% of the people who make fast money?  I’ll bet you can guess, if you don’t know.  More than 90% of the people who make fast money end up not only losing all of the money, but end up in worse condition than when they started.  So even if you are “lucky” enough to make fast money, what is likely to happen to you is that you will end up worse off financially and emotionally when all is said and done.  I won’t give any specific examples, as I ran into a bit of trouble in the past quoting specific examples (oops).  So why does this happen?

I think the simplest way to understand this, and I confess I have personal experience at this is to say that we need to grow with our money.  The complicated answer has to do with our emotional addictions and how we feel about who we are, as well as how out of balance we are in our lives.  The simple answer is that we need to grow with our money.  It’s the old saying that a millionaire will make a million dollars.  A million dollars does not make a millionaire.  And with people, one of the most common things is to find that people have things completely backwards.  If you see a person you don’t like and see him/her as a jerk, I got news for you brother – the jerk is you.  I can explain it to a mathematical certainty, but we’ll save that for another time.  The important thing to commit to memory is that we need to grow with our money, and the good news is this: If you take a longer view of your Forex Trading in terms of financial success, this will come to you naturally.  Think about it.  Today, you show up for a Forex Trading session with friends, and Erik talks about a great book he just read on finances.  You have all the time in the world, and you can hear some ideas that really make sense.  You buy the book and you read it.  The hare has little time for reading unless he or she thinks it’s going to give them a secret to make faster money and to have a lower loss ratio.   The hare may buy the book, and even thumb through it, but for the hare, there are bigger fish to fry.

Inside the Tortoise Strategy
I’m going to give you a couple more reasons for taking a longer view of things, and then we’ll talk specifically about what is possible.  You will see how this approach is important when it comes to the Forex Trading learning.

When I was 15, I used to plow oats each year on our farm.  Back then, it was cool to just ride the tractor, and be careful to not die when the plow caught a rock.  If you don’t know what I am talking about… back then, when you caught a rock on the plow, the tractor wheels just keep rolling forward.  Since the tractor couldn’t go forward, the front end just kept going up.  If it kept going, you would end up with the tractor on top of you.  So the right speed was one that allowed you to step on the clutch and stop the tractor from flipping on top of you.  Sounds scary?  It was a little like jumping off roofs as a kid - it just seemed a little scary.  We never thought about anything really serious happening.  Just wanted to give you a little taste of the farm world.  What we were really doing was much farther out than what was on my mind.  I was “driving,” and that was fun for me.  Sure, I got hot and tired, but I was still driving.  But the one thing I don’t think I thought much at all while I was doing that was “why” I was really doing it.  I was getting the ground ready for the planting of oats.  Well, that’s what you are doing right now by reading and studying this.  Some people are ordering gardens in a box, but not you.  You are tilling and planting your own field.  That’s what this site is all about.

But there’s one more thing that I learned.  You can’t make oats grow faster.  And if you can make them grow “a little” faster, it’s not worth wasting your time on for the addition acceleration you get.  We can go to seminars and have endless meeting about how to make oats grow faster, but that’s not going to happen.  So one of the most important things to understand about the whole process of creation or growing is this: know which role you are playing.

This is all part of the lifestyle and mindset of the tortoise.  It can be your Forex Trading lifestyle as this is all relating to your personal growth as a Forex trader.

In the next Forex Trading post, we’ll go a step farther.  Have you ever done anything like this?  Any thoughts? Questions?  Take a moment and write them down or comment on Forex Trading in our comments section.

Inside the Tortoise Strategy

• Take a Longer, Realistic Approach
• Grow with Your Money
• Work on Balance in Life
• Start Small

Don’t get me wrong.  I’m not saying that the fast money strategy is wrong.  Understand where I’m coming from.  I spend my time helping people to be successful in Forex Trading and so I have two issues with the fast money mentality.

1. A microscopic drop of humanity does it and
2. Of those that it does happen for, 90% of them, it’s more of a curse than a blessing.

We all know this, and yet we still love the pitch the Hare gives us.  But we are talking about you having the power to control your financial future.  An ACME rocket, as used by Wiley Coyote, is probably not a good idea.

Because I am a Forex trader, I look at things like I look at Forex Trading and the reality is that a tiny percentage (and I mean tiny) are going to be able to make fast, big money in Forex Trading or anywhere else.  So while it may be fun to talk about how to make fast money, it really doesn’t do much good for people.  We just learn the same old lesson over and over again until we get tired of that game, and want to know about a better way.  Could you relate to that at any time in your life?  Take a moment and write a Forex Trading comment or question, then continue on.