Longwood Currency Trading

Current Picture Hi, I'm Peter Rose, Founder of Longwood Currency Trading, and welcome to LCT Blog Post 04/12/20 — From FOREX Currency Trading Failure To Success.

This is actually the first post I created. It is cobbled together from different books and courses I've written as well as from a couple of emails to students.

To get an idea of my approach to teaching currency trading, you can find a nice discussion on my LCT Education Page at Longwood Currency Trading.

The crux of those discussions — and the reasons I initially failed as a currency trader — boils down to just the following:

  • There's too much useless information — like indicators — being taught.

  • Most educators know how to trade, but they simply don't have the skills to teach or coach.

  • I did not grasp the key component of risk management, and that alone cost me tens of thousands of Dollars.

  • I determined that one of the major reasons traders — including myself — fail is that the whole concept of the risk to reward ratio analysis is presented incorrectly.

  • I eventually found out that there is just one small difference from being a successful real estate investor and being a successful currency trader, i.e. the rules are exactly the same, but — not how they are implemented.

The above is just my opinion.

However... as someone with a B.S. in Physics, a 33 year career as a Senior Software Engineer, millionaire real estate investor, and 50 plus years as a karate Master I am no dummy, or someone prone to doing silly things when it comes to money. I know how to study, learn, and implement.

I did all of that: shelves of books, hundreds of videos, and even a couple of courses. And for years I studied and practiced literally thousands of trades in a simulated account — and actually did quite good.

But because of the above highlighted issues, I lost all of my money — tens of thousands of Dollars — in a very short period of time even though the methodology I used was based on my study and experience trading in simulated accounts.

It was only later, after actually talking with software engineers who developed trading applications for brokers, that I understood why simulated trading is a total waste of time for anything other than learning how to place a trade, and how to use a trading platform.

Basing developing trading skills on a simulated platform is like learning to drive a car by going down to the go-kart track....

As a very technical person, it took me a long time to realize that trading was not learned the same way other skills are learned.

It's all because I thought this trading thing was complicated. So, I approached it as a complex problem to solve. That's why I did all of the study that I mentioned, and why I wrote thousands and thousands of lines of computer simulation and analysis software code, because that's how you solve complex problems.

In fact, when I looked back on how I developed my skills as a real estate investor, I understood the reason I had failed at trading.

As soon as I stepped back from my huge losses and started trading 1 single mini lot with a $1,000 account: it dawned on me. Trading is not complex. It's simple.

How simple?

Stupid simple....

Trading — all trading, whether it's stocks, bonds, real estate, commodities, currencies, or old tires — is based on value.

But finding value in a currency pair is not undertaking a complex study of fundamental analysis anymore so than doing extensive technical analysis.

As soon as I understood how to look objectively at trading, my results trading that mini lot were amazing, like averaging 13% per month.

Oh, I still succumbed to flights of insanity where I'd take the account to the wood over some stupid mistake. But I was always able to get back on that dead horse and duplicate my good results.

I was able to do that by following just a few, very simple rules that have binary — yes/no, Door A/Door B — type of decisions.

There are detractor's who would argue with these assumptions.

That's fine. They would be wrong.

How do I know this?

I applied those same principles in the 2 times I lost $1,000,000 net worth to come back each time. Match that....

The moral of this story is simply this: Trading is not complex or difficult. It is simple.

However, in that simplicity lies our deep, innate urge to complicate something that looks like it should be complex.

To resolve this, look for the simple pieces that make up the complexity, figure out one rule to resolve that issue, and continue to do so until you have a solution path through all of the clutter that complexity creates.

Ralph Waldo Emerson says in his Essay On Self Reliance:

"Familiar as the voice of the mind is to each, the highest merit we ascribe to Moses, Plato, and Milton is, that they set at naught books and traditions, and spoke not what men but what they thought."

To rip (er... that would be to paraphrase) what Emerson is saying: Sure, you have to know what Moses, Plato, and Milton had to say. That's important. But what's not important is that you try to replicate what they say as what you say, but rather to "...speak not what men but what you think."

Thanks for taking your time to read this post,

p.s. For more of my thoughts on trading in the FOREX foreign currency market, check out my YouTube channel for Longwood Currency Trading