Lessons From 10 years’ Involvement With The Forex and Financial Markets

Lessons From 10 years’ Involvement With The Forex and Financial Markets

Experience Beats Skill

This year marks the 10th year since I was first involved with the currency markets. It’s been an eventful journey. My first year was characterized by a series of losses and a blown account and extremely valuable lessons I wish someone had taught me when I first started.


I was introduced to forex trading and without any knowledge of it, I quickly invested money in a brokerage account and started trading with no rules, strategy or trading plan. In no time, I had quickly ‘gambled’ it away. After other hard knocks, I almost gave up trading thinking those that made it were either extremely lucky or had something I might never have.


That first year was a pain I would never desire another to go through, and that’s what Forex School Uganda is about. Only passion kept me around the markets. It was a bitter sweet experience that started my immediate and urgent quest for professional knowledge that would see me spend days devouring almost every forex book I came across which quickly turned into thousands of hours of study, practice and mentorship.


I tried almost every strategy I read about and tested them only to find they were useless. Owing to much study, trial and error, my efforts paid off and I was able to develop a strategy but it was both extremely risky and also required constant screen time which I couldn’t afford as a fulltime employee then.


I knew I needed to learn better ways of trading to reduce both risk and screen time while improving my profitability over time. That led to seeking out mentorship from professionals around the world that were trading the markets fulltime every day for a living and had attained the success I craved.


These lessons will save you years of trial and error worth thousands of dollars and possibly more in unnecessary losses. When taken to heart they will help shorten your learning curve


Get A Mentor


You have two options: 1-Put money in the markets and trade it without learning and you’ll quickly realize you gambled it away, or 2-Save and invest it in mentorship and quickly learn which will help lessen your learning period as you learn from a mentor’s experience and knowledge.

Trading is ruthless when you don’t know what you’re doing. Its unfortunately the rude awakening you are going to find when you chose to go it alone. To find the best trading opportunities you have to trade with the best. Like the saying goes, you can’t fly with the eagles and eat with the vultures. A mentor in this business can be the difference between success and failure.

It takes a great amount of time which could number into several years of trial and error before ably trading the markets profitably with confidence after much dedication, study and commitment to quality education. A mentor can however role back this time and help you gain understanding of the markets, identify the reasons for your struggles and help you to professionally approach the markets fairly quickly while preserving you from the unnecessarily heartbreaks blown accounts. A mentor can help you avoid costly mistakes, decrease the time it takes to become profitable and increase your success rate.


Some successful traders are self-taught, but most are not. Even those that are self-taught admit that they would have saved money and time by having a personal teacher/mentor. Being self-taught is a great goal but it should not become a higher priority than becoming profitable!


Develop A Trading Plan

A trading plan is basically a list of rules and conditions that must line up as confluence before a trade is carried out. It’s a trade setup filter that and give gives you specific guidelines of when and how to enter a trade. They are made out of practice and back testing and they include conditions for trade entry how to manage your risk.


Once a plan has been formulated, stick to it. Take every single setup according to the plan. This is is extremely important for your long term trading success. It helps you become accountable for e very trade and to trade with confidence


Keep A Journal

This is simply a record of trades taken, their outcome, the reason for their outcome (why they won or lost whether there was a news event or you ignored your plan etc), mistakes made (something you either should or shouldn’t have done but either did or didn’t about the trade). It helps you learn from recorded experiences so you can both improve your strategies and trading techniques, as well as avoid mistakes made before.


The journal becomes the most your most important study tool and reference point in your trading journey based on real live market experiences. This makes you a smarter trader. It builds your confidence in the trades you take and makes you a more disciplined and accountable trader based on past repetitive precedent. This is a very important tool that professionals use and it’s a must have if you’re to become one. Without it you’re doomed to fail from the start. Its importance cannot be over exaggerated.


Risk Management

Determine the maximum amount of your account you’re willing to risk on any single trade or total combined trades percentage wise and stick with it. You should not exceed 1% to 2% of the entire trading capital on one single trade, and the total combined risk of you running trades at any one time should exceed 5% of your total capital.


Be sure to check the correlation of the pairs traded otherwise you might be risking more than you should on a single currency disguised as a different pair. If two different currency pairs are positively correlated especially with a common currency in both, holding a similar long or short position on both of them would be risking twice on a single currency which is not good. On the other hand, taking two opposite positions on positively correlated pairs is basically hedging.


Hedging is never a good idea as it is basically one trade cancelling out another and needs experience for one to take advantage of volatility differentials on both pairs to be able to profit from it. It’s mainly used to protect a bad position to avoid farther loss until there’s a shift in market conditions. As a trader, you should never get to this point. You must take a measured position with clear stop loss levels and profit targets.


Manage Your Emotions (Psychological Training)


Emotions in trading are usually counterproductive. Very often newbie traders jump out of winning positions too quickly for fear of price reversing and wiping away their gains, while they hold onto losing positions in the hope that price reverses in their favor. Unfortunately, you can’t rely on hope when it comes to trading.


This is akin to gambling. It only leads to frustration, margin calls and blown accounts at best, or depression with it at worst. You need to eliminate your emotions from your trading and let your trades play out according to the plan.


Then trade according to the rules in the plan and stick with them regardless of anything. Do not interfere with the trade when in a drawdown or winning unless it’s about trade management in accordance with the plan. This however is only possible when you have a clear criterion for entries and exits formulated by a trading plan. Accept that losses are part of trading and learn how to manage and live with them



Listen to the market. Follow what they say not what you would wish. Trade what you see not what you imagine. You can’t dictate to price movements, its beyond your control with so many factors determining it. Learn the aspect of patience for the best market conditions and setups. Trading should be more reactive than predictive.


In other words, we react to what the market is telling us and go with the flow and not try to imagine something that the market is not indicating. If there’s no setup that matches your trading plan (and by matching I mean it ticks all the boxes of the conditions to take a trade not just some), stay on the sidelines. Never force a trade. Keep out of the markets, there’s always another trading day.


The right opportunities will come. And since trading is based on probabilities, you want the most probabilities to lineup in your favor. That’s why you have to be willing to stand aside and wait for the right setups


Lack of discipline is the major reason why people fail at trading. You have to strictly follow your trading rules and plan consistently not just sometimes. You have to do the right thing even if it doesn’t fit your liking. It takes discipline to follow a sound risk management strategy.


Practice, Practice, Practice

This cannot be overemphasized. Every skill has to be horned to become perfect. To become good at what you do you must practice regardless of your field of endeavor. That’s true for the professional athletes and any other professionals. And much as past performance has no bearing on future results, it helps develop a rules based strategy based on the performance, boosts your confidence in placing and holding trades according to rules


Godfrey Kakulu

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Godfrey Kakulu

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