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How the Power of Compounding can get you to your Trading Goals


Author: Shanda Matieshin


In todays post we are going to focus on a topic that is near and dear to my heart. Many people, not just traders simply do not understand the power of the principle we are going to share with you today. If you fully grasp and understand this topic you will be mind blown.

Compounding can literally change your life. It has been said to be the 8th wonder of the world. Running with this concept will allow your mind to open up to the possibilities that are available to you through trading and investing. 

Sometimes when we begin our trading careers we are short sighted. We don’t see the bigger picture and how trading can literally change our lives. As new traders we often focus on achieving huge returns in the first few months of trading and don’t quite know how small gains achieved over a lifetime can impact us. Large gains are great such as achieving 10-20% per month. This is definitely possible but I don’t want you to get down on yourself if you are consistently achieving 2-3% per month as well.  Because achieving these returns consistently can also have a HUGE impact on your trading portfolio over the long term.

When you consider the fact that 95% of traders and investors fail to make money… you should be ecstatic about the fact that you are making a consistent 2-3% per month.

When we understand compound interest we develop a long-term perspective when it comes to trading. We understand that minimal drawdowns in the short term are okay as we see the long-term picture.  This brings me to the two most important topics I want to discuss today.

Compound interest teaches traders two very important things

1.     The Value of Time

2.     Patience 

To see the tremendous results of compound interest we need TIME. Really to see the fruits of our labor in anything in life we need time. It takes TIME to develop something great. Trading is no different.

With compound interest you need TIME on your side. Because the more time you have the greater your compounded returns will be. So my advice… start compounding NOW. You have nothing to lose!

Take a look at the example below. You can see how a simple $10,000 invested at the different rates of return will compound based on different time periods. 

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 Now you may be thinking to yourself… these are small rates of return! Cant I expect more from actively trading the forex markets?

The simple answer is YES! I am showing you the impact of what most people would consider as normal to average returns and the impact it would have on your investment portfolio. Now just think if you were making double 16%? What would the results of a portfolio compounded over 20 years at 32% per annum amount to?

After a simple calculation in a compound interest calculator you would find that a small $10,000 investment compounded at 32% per year for 10 years would result in a final balance of $235,253.13. How crazy is that! Look at the chart below to see the figures.

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So what is my advice for you moving forward? Well this brings me to my second main point and that is…

PATIENCE

You must have patience in the process and trust that time and the power of compounding are on your side. What does it take to develop patience? Discipline.  You must be disciplined to stick with your trading plan and develop that long-term vision. You will not reach these figures by investing for only 1 year… even 2, 3, 4 or 5 years! You must stick it out! The power of compounding only takes form within the last couple years. This is when we see the big returns. After all, when you think about it… 32% return on a balance of $235,253.13 is a much larger number than 32% on $13,200 which is the investment balance in year 2. This is why in trading you must persevere through the difficult times. If you gave up after 1 year of what you considered “ok” trading results… you are missing out on a lifetime of possible gains.

So stick it out! Realize the power of compounding and how these seemingly “small” returns can have a HUGE impact on your trading results in the long term.  

It is the impact of those long term results and how in the first few years it might seem like you are not achieving anything but when you wait it out you will see that the last few years are where the biggest gains are made.

To display this in a visual form… take a look at the photo below.

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In the first 5 or so years you can see that your gains and interest earned are nothing to brag about. This is when your patience is tested. Do you have the discipline to stick it out and keep your long-term vision at the forefront of your mind? After taking a look at this graph I hope you do! You can see the power of a small investment and making achievable 3% per month returns and how this can impact your life! In this example you only invested $22,000 and you came out with over $400,000 in gains! This is the power of compounding interest and making consistent and regular deposits into your savings and trading accounts!

Now lets also take a look and see how making regular contributions will impact your portfolio value at the end of the same time period. It you look at the revised chart below you will see the impacts of NOT making regular savings contributions into your investment account.

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You can see that you ended up with about $100,000 less than if you simple added only $100 to your trading account every month… so my advice? 

Get in the habit of saving and making regular contributions into your trading and investing account. Just by looking at these graphs you can see the enormous impact that this simple habit can have on your investment portfolio over time. Now think if you were to add even more money into your account every month? Take the time to think about what a reasonable amount of money is for you to be able to save every month.

Then setup regular contributions in that amount every month and have the discipline to stick to it. Those who have discipline are the ones that will be rewarded. If you find yourself falling short keep this graph in the forefront of your mind so that you are reminded of the powerful impact that one decision can make in your life. I hope that you make that decision today. Your future self will thank you!

At DARA we have developed an amazing tool to assist you with measuring your trading progress. It is journaling software designed to help you monitor your results and ensure that you are on track for your goals! If you want FREE access to this software click the button below! Journaling DARA will ensure that you are on track to achieve the desired life you want through trading and investing in the forex markets!



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The Traders Mindset


Author: Shanda Biggs


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In todays post we are going to discuss something near and dear to my successful traders hearts. It is the mindset required to become a profitable trader. There are many attributes that make traders successful but in this post we will narrow down on the two characteristics we believe to be most important.

A certain mindset must be attained in order to succeed in any area of life. Trading is no different. Forex trading requires the fine-tuning of a handful of characteristics in order to be successful. These specific traits will be identified a little later in this post.

But first, I want you to think about something… “Is success for a trader really different than attaining success in any other field of life?” To be a professional sports player, is there a different mindset required than becoming the CEO of a fortune 500 company?  

No. The skill set may be different but the mindset for achieving success is transferable across all fields no matter what you are trying to achieve. If you study the lives of successful people in different areas of life you will find a common thread that runs throughout. 

 People who achieve high levels of success all have one thing in common. No matter the particular area of life they chose to master, they all have a high level of belief in themselves. A confidence in who they are and their ability to achieve what they have set out to achieve.

This is the most important attribute that you need to develop. If you develop an unshakeable belief in yourself there is nothing that can stop you on your journey to success. Why? Because when anything comes against you, you still take action. Because you believe in the end result. You know with total confidence that you will reach your goal so you let nothing stop you. This is the unshakeable attitude you must develop to be a successful trader.  

With that being said. There are two particular mindset characterizes that are essential for success in forex trading.

Discipline 

The first is discipline. You must develop a rigid routine that you follow to a tee. Forex trading requires that you execute the same actions day in and day out. You must know how to follow a plan and stick with it. This will ensure your long term success. Where I see many traders fail is not following a strict trading routine. Their emotions sway their actions and this causes inconsistency in the routine. An inconsistent routine is a mess. There is no structure to follow. Lack of structure makes it easier to trade based on your current mental state and emotions.

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Since this is what we want to eliminate in our trading we want to ensure that we have a strict trading routine and follow it. Having a solid trading routine makes it easier to have discipline in the first place. You know the action steps that are required of you every day and you execute them.   

What is the next attribute that all successful traders have?

Patience

You have probably heard about having patience time and time again. It is so important that you develop an attitude of patience when trading the markets. It will ensure your long-term success. How? 

When you have patience you wait for the right setups to present themselves to you, you take trades that only meet your trading plan criteria and you do no have the fear of missing out. Patient traders understand that the market has an abundance of opportunities and that if the trade does not look quite right, that there will be another opportunity for them to capitalize on.

Great trades happen often but it takes a patient trader to capitalize on them. Not allowing the emotions of the market reel them into “Okay” setups. 

Patient traders play the long game. They understand that trading is not a get rick quick game and that true success in the markets takes time. When you understand that, you do not try to catch every trade. You wait for the perfect trades to present themselves and you execute. Suddenly you are not lured into okay trading setups but you only take pristine setups that perfectly align with your plan.  

I cannot stress enough how important these two qualities are to your success as a trader. If you want to learn how to develop these qualities I would recommend doing personal development. This will help you to get into the mindset of success. Patience and discipline are needed to success in any area of life but they are especially important for trading. If you can master these two areas I have no doubt that you will be on your way to consistent and profitable trading.




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Developing Confidence in Your Trading Strategy - How to be solid as a rock while trading

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Developing Confidence in Your Trading Strategy - How to be solid as a rock while trading


By Alexander Vladimirov

By Alexander Vladimirov

 

                                

The importance of Strategy

As with any profession, you need to put in time and effort to be successful at it. Your strategy is the pillar that your trading will be based on. If your strategy isn’t a good one, you will fail in the long-run. A strategy is generally something which is built over a vast amount of time after many trials and errors. Of course, there are a vast amount of strategies that exist, but how do you choose the correct one? We’ll tackle this topic in another article, but this is why it’s so difficult for newcomers to get started and not lose all of their money really quickly.

Evestin Forex robots will allow you to inherit already built strategies and help you develop into a profitable trader no matter what your experience level is. If you have your own strategy – you can combine it with some automation. If you are new, you can see how, over time, a good strategy and discipline equal positive results, until you can develop your own.

The importance of mind-set and self-awareness

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Mindset is very important because things can get really ugly if you’re in a negative trend. You start to doubt yourself, the market, the broker and everything around you. New traders often enter this cycle and will start to revenge trade (this is when you double your lot size after an already lost trade in order to win back your money and even profit). Revenge trading is usually done shortly after the trader closes his trade.

Tip of the day:  After a bad trade – step back, relax, take a walk and come back to the markets in the next day. There will always be opportunities on the market – it’s important you have the money for them. Use losers to learn a lesson and strengthen your trade execution!  Always make your trade with a clear and calm head!

The importance of numbers

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At the end of the day, trading is a numbers game. Before entering each trade you should know a few things.

  • what is the long term trend
  • based on the long term trend – how many pips am I going after (take profit)
  • where will I place my stop loss
  • what is my margin level and risk tolerance
  • If you know your numbers you will build confidence because you will know beforehand what to expect. If you have a good strategy and know your numbers, you will eventually be in profit.

The importance of patience

Last but not least is patience. This skill encompasses all others above. Patience is the skill that allows you to enter the trade at the correct moment. After a certain amount of experience, there are things you see in the market, just by looking at it. You have a better sense of the direction it’s going to go. While you have to follow your strategy very clearly, sometimes it would be needed to withhold from entering a trade, or maybe exiting one a bit earlier. These should be rare cases, of course. Patience is also what generally leads you to be profitable as it will allow you to let your running trades run until the end. Many traders suffer from closing their winning trades too early. This is something that will make the numbers not add up in the end.

Our robots have all of these skillsets integrated. Take your trading to another level by starting your free 30-day trial below:

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Why are our robots so successful?

The first thing you need to know is that our robots are not like other robots. Most trading robots have been created using past price action and lagging indicators. Then robots performance is optimized to fit past price action. That’s why you see amazing past performance results on many sites.
 
What happens when these robots trade live? They go bust!
 
That’s because these robots are curve-fitted to trade with past price action and fail miserably when they trade with a new unpredictable price action.
 
In contrast, our robots are not based on past price actions. Rather, they’re based on real-life manual trading systems. We’ve taken three successful real-life trading systems as used by professional traders for many years. And automated them, so everybody can use them.
 
This is why you can see our robots only make a few trades each week. They scan the markets like pros, looking for the best signals and trading opportunities. Our robots don't use martingale, grid, hedging or high leverage. Instead, they mimic pro traders and risk a small percentage of your account per trade.
 
It’s like having a professional trader trading your account… except it’s better!

"Real Trading - Real Results"

 

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