Forex Blog: March 2011

As a long-time trader I receive more than my share of advertisements touting new trading programs and "secrets" to making a fortune in trading. While some systems are legitimate, the majority of these e-mini trading schemes misrepresent both the profit potential and prerequisite skills required to trade successfully. That bothers me.

E-mini trading is not a get rich quick scheme. It can be very lucrative for accomplished practitioners of trading, but few traders are able to profit consistently from the first day of their trading career. Yet misleading advertising, while expressly prohibited by various government regulatory organizations, is rampant on many trading sites. Overstating potential rates of return is a quick and easy way for program promoters to garner potential traitors quickly. The public is naturally lured to the potential to make money the easy way. Let me be clear on this point; trading is not a quick and easy way to make big money or become a millionaire.

There is little argument that our current economy is going through some tough times, and that makes the lure of fast money very popular. Unscrupulous trading educators can easily take advantage of our current recession by overstating both the potential profit and easy technique trading professionals employ. Prior to writing this article, I performed a search on Google centered on "learning to trade futures contracts." It was an eye-opening experience, as the claims of easy money and simple trading technique were rampant. Some of the claims were absolutely ludicrous and I find it difficult to believe that anyone would fall under the spell of these gimmicky and poorly constructed websites. Then again, I have been trading my entire life. For someone who is completely new to futures trading, how would they be able to differentiate between reputable trading sites and websites making audacious claims? For that matter, the uninitiated might well be attracted to the website that claims the highest returns. Lacking experience, they would be unaware of what is fact and what is fiction in terms of potential trading rates of return and the training required to be successful.

Let's set some facts straight:

1. In 25 years of trading I can only think of one month that my rate of return was higher than 200%. That month was a fluke, and I have never repeated that feat.

2. The rate of failure for first time, or new investors is approximately 90%.

3. For new traders who take the time and money to learn a quality trading system, practice that system, and retain a professional mentor, the failure rate is still more than 50%.

4. Trading psychology and money management are essential in trading, and these two trading aspects alone can take a considerable amount of time to master.

These four primary trading considerations alone illustrate the difficulties in earning higher rates of return from the first day you begin to trade. There are many training variables to consider and master before most new traders can become consistently profitable.

So what is the point of this article?

The notion I want to emphasize to individuals considering a trading career is simple; the trading business takes time, effort, and experience before you become consistently profitable. I want to warn potential traders about websites and advertisements that promise fast money and high rates of return. Generally speaking, trading is not a get rich quick proposition and should only be considered by individuals who are willing to spend the time and effort required to become consistently profitable. In short, don't fall prey to the hucksters who promise high rates of return with little or no effort. Trading is a career, and like most careers it takes several years to become competent.

Real Live Trading Doesn't Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here.

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