No Holy Grail in Currency Trading: We must live through it!

April 26th 2010, By Dale Pinkert

The search for the perfect system, methodology or mathematical approach to learn currency trading, or for that matter any other asset class, turns us all into Don Quiotes battling windmills and searching for the impossible dream. My main thesis is there is no substitute for the hard work and the passing of time to become effective currency traders!

The hard work consists of initially assuming the role of student apprentice, in other words learning the basics and how to use the tools of, no pun intended your new trade. The role of student should always be one that we are able to access throughout our trading careers even through the progression of becoming a journeyman and master of this craft. In other words just like a plant “If we are not growing , we are dying.”

As all students seeking advancement we must study to learn currency trading, there is no substitute, cliff notes or short cuts to learning the fundamentals for these skills to be acquired.

If your goal is to have a Masters degree or PHD in trading then you must earn your Bachelors degree first. Following through on this metaphor, besides completing and passing each course which is hard work, nose to the grindstone stuff, this degree is achieved through the passing of time (years) because we cannot learn experience, we must live it.

Now to the brass tacks, it is my belief that the saying “A picture speaks a thousand words” is a truth demonstrated in currency price charts. These pictures capture what the market has said in historical terms and expresses the right now with current price action. In my view these currency prices are significant because each buyer and seller are casting their votes not with their hearts or minds , but with the measure and commodity markets value the most their wallets!

Therefore price is the moving target, traders vote up or down on with their most precious resource their capital. Just like a political campaign each trader decides how much currency to put at risk on their candidate to capitalize on their election or defeat, this is called risk management.

A Pinkertism “The difference between professional traders and amateurs is pros know how to lose so they have capital left to be right with.”

This risk management is a learned skill that comes through the hard work of being a tenacious and persistent student, which could mean months of back-testing a trading technique and the preparation for battle before the shooting starts. Having your strategy ready to deal with whatever unfolds before your eyes. Currency trading is a talent where spontaneity will not serve you well.

In the military, as a new recruit, you have superior officers that train you. In academia you have teachers and professors who help you learn. Although they put you through the rigors to prepare you, not always to your liking, the wisdom they pass on to you, will resonate when you need it most. We need it most while under duress to survive and perform under pressure, putting loses behind you and being humble with your success.

Since there is no Holy Grail, I believe seeking out a mentor is a most effective way to learn currency trading, survive and eventually prosper in the trading business.

A legendary Chicago commodity trader Richard Dennis spawned the Turtle traders. Almost all went on to become renowned in the industry themselves. A mentor for traders, can expedite the experience requirement as they share the wisdom of their years. A mentor can point your eyes to aspects that could take years or never happen if you go it alone. They can see the flaws, you can’t see in your style, they become a mirror for you.

In conclusion consider seeking out a caring, qualified mentor to help you learn currency trading. For your journey into becoming a currency trader, it will be time better spent than the endless search for the Holy Grail of trading!