The SHOCKING Truth About Making MONEY From FOREX

If you're failing to make life changing money from trading Forex, even though you think you're doing everything right, the chances are it's because you're making three critical mistakes that kill any possibility of being profitable. The shocking truth about Forex is that it isn't like any other financial market. And if you trade Forex with the same strategies and indicators you trade stocks, commodities or any other market, you will fail, guaranteed. Forex is not what people think. The good news is, once you understand what I'm going to show you in this video, you can transform your results and go from a losing trader to a winning trader virtually overnight. Profitable trading is simple. Prices are constantly fluctuating up and down, and all you have to do is buy low, sell high and pocket the difference. And these opportunities repeat themselves every day and every week and every month and every every year, making Forex like an ATM to withdraw cash from. The problem is we trade on the right hand side of the chart, the part that hasn't happened yet, which means you need to predict the future. And that is a probabilistic situation. A certain pattern may predict the price has an 80% probability of going up. But even with such high odds, 20% of the time you would still lose. And even when the price does go up, sometimes it will go up only 20 pips and other times it might go up to 100 pips. So there is a huge amount of variance for the profit potential. So a trade in edge is something that gives you a positive expectancy from that variance. If you predict the direction correctly 60% of the time and make a hundred dollars for each win and lose $100 for each loss, on average, every 10 trades, you make a net profit of $200. That gives you a positive expectancy per trade of $20 if you predict the direction correctly only 40% of the time. But. But you make 300 for a win and lose only 100 for a loss, your expectancy is now $60 per trade. But as a warning, you could be right 90% of the time. But if the price only went far enough to earn $100 per win, but $1,000 per loss, you would have a negative expectancy of minus 10. Now, scammers love to boast about their high win rate systems, but they conveniently neglect to tell you the fact that it is still a losing system. So a trade in edge is a combination of win rate and profit to loss ratio. The more often you can predict moves that go a long way. When you are correct and only a Short distance. When you're wrong, the bigger the expectancy of your edge and the more money you will make. In a nutshell, that is how you make money from trading Forex. But to be able to do that consistently and reliably, you've got to understand how the Forex market works, which is nothing like other markets. Something that almost nobody else understands, and that is mistake number one. Forex price charts do look like the charts in every other market. We have an open, a high, a low and a close. But a price chart is a lagging indicator. So let's use the analogy of a GPS tracker that shows the results of a journey for two different vehicles that traveled from A to B. We can see that they've done the same thing. But to predict what they do next, you need to know the type of vehicle. Right? If one was a diesel coward for my four and the other was a small electric city runabout, they will travel at different speeds, they will run out of fuel at different times, they're going to take a different route and they may be blocked by different obstacles. Well, price charts are likely GPS tracker, they show us what has already happened. If you want to predict what is likely to happen next, you need to know what vehicle is driving the move and what the terrain is like. And Forex is entirely different from other markets. It's like comparing apples to oranges. These are all long term charts for various global stock indices. And notice how they all go from the bottom left to the top right. Even with the occasional crash along the way, the general trending stocks is always up. These are all long term currency charts stretching back over 40 years. And they are all more or less in a narrow range. There is the occasional trend to pull down, but generally the price today is almost the same as it was three or four decades ago. This is the fundamental difference between Forex and other markets. Stocks are designed to go up in value. They exist only to create wealth and as such they are an entirely speculative market with every participant trying for the same goal of making profit. Forex on the other hand is a utilitarian market and that means it exists to provide a service. And that service is is to facilitate international cross border commerce. When someone in Europe wants to buy goods or invest in America, they have to sell their Euros to buy US dollars which they can then use to achieve their objective. They can pay for whatever it is they want to buy and that causes the exchange rate on that pair chart to go down. But then when someone in the US wants to buy something or Invest in Europe. They have to sell the US dollars and buy euros to pay for it. And that causes the price on the chart to go up. And approximately 82% of all forex trading is utilitarian like this. Only 18% of forex transactions are outright speculative. So the vast majority of participants are not aligned with the same common goal, which leads to very different patterns of behaviors from other markets. For example, some hedge funds and retail traders like us will buy currency in the hope that it goes up in value. We are the true speculators and we are in a very small minority. Businesses that trade internationally exchange currencies in order to pay for the goods or services they need. They don't care if the price goes up or down. They don't even look at or use price charts. Insurance companies and mutual funds, they exchange currencies to pay for an investment in a foreign country. This is a utility, not speculation. But they are indirectly concerned about whether the price goes up or down after their exchange. Because lets say a US pension fund swaps US dollars and buys Japanese yen to buy shares listed on the Tokyo Stock Exchange. And those shares rise in value by 20% over the next 12 months. To collect their profit, they need to sell the shares and then convert their yen backing to US dollars. But if over the same period the yen has gone down in value by 20%, that's why they profits from the shares. And if it falls by more than 20%, they make a loss. So they protect themselves by hedging their position using a form of insurance, either by an option or futures contract. Now if the yen does depreciate against a stronger US dollar, they could just buy it back by selling the pay and they pocket the difference, which cancels out their loss. The pension fund is trying to profit from the investment in stocks, not Forex. They have to make one Forex trade out of necessity to facilitate that stock purchase in the first place, and then a second Forex trade to protect themselves in case the Yang changes value when it comes time to sell the stocks and hopefully collect their profits. The vast majority of Forex transactions are hedges like this. And these transactions force the price to be in a range and actually prevent it from trending very far. So you can see that there are many different participants, each with completely different objectives and motivations for exchanging currencies. Forex is utilitarian, not speculative, which is the main reason Forex charts tend to oscillate in ranges rather than trend forever upwards like stocks. And another unique characteristic is that Forex is not Actually a single market. There are 185 different world currencies, but 86% of all trading is concentrated on these eight major currencies. When you look at a chart for other markets, like the oil price, for example, that chart is showing you one single standalone asset by itself. But in Forex, each currency is a standalone asset that represents the economy of the nation that it belongs to. And they all have their own interest rates, levels in inflation, central bank policies, geopolitical conditions, etc. So a 4H chart is actually a comparison between two totally separate markets. It would be like creating a chart that compares oil to gold. And when you place a trade in Forex, you are always buying one market and selling the other. And as the price goes up on one, the other must fall an equal proportion. The entire market is an equilibrium. There's the total value of all the currencies in the world. Now, if one currency continually went up in value the way stock markets do, another currency would have to eventually fall to zero. And that would effectively require one 100% of the money to flow out of one country and into the other. And that is not how the world economy works. The entire system is designed around maintaining its stable equilibrium. As one grows in value, one or several others have to shrink in value by the equivalent amount. And this literally restrains the pair charts and forces them to oscillate within a sideways range. And this leads to mistake number two. A single currency like the Euro is isn't only compared against one of the currencies like the US dollar on one chart. It's compared against every other currency as well. If someone uses US dollars to buy Euros, there are now fewer euros available for other people to buy, unlike anything that people want that is in less supply. The value goes up and therefore the price has to be adjusted on every single pair. Because it doesn't matter if someone wants to buy euro with US dollars or or British Pangs or Swiss francs, the value of the euro as a standalone currency has increased regardless of which of the currency you use to buy them. And this is calculated in forex using something called triangular equilibrium. It's an automated algorithmic process. If you multiply the price of the euro pound by the pound U.S. dollar, you get the price of the euro U.S. dollar. If you divide the EUR U.S. dollar by the price of the euro pound, you get the price of the pound U.S. dollar and if you divide the EUR US dollar by the pound US dollar, you get the price of the Euro pound, you can confirm all of this for yourself using your own charts. And already you can see that orders on one chart will cause the price to change on two others as well, even though those payers didn't have any real orders on them at all. But of course, it's more complex than that. When the price is adjusted on those two other pairs in that triangle formula, the value of those currencies has changed and their values then adjusted against all of the other currencies as well. And before you know it, a real trade on one pair has resulted in a price move on every other pair in the market as well. That means that over 96% of price changes in Forex happen via a mathematical formula rather than real transactions. So, for want of a better phrase, they are ghost moves. Charts are moving even though no one is trading as such. Most price changes are random. Something but is commonly termed noise. And this is the frightening thing. It is impossible to profit from a random market in the long term. It doesn't matter what system you have, what time frame you trade, or what fancy money management you use. It is a mathematical impossibility to beat a random market. If you trade random noise, you are guaranteed to be a net loser over the long run. Statistical studies have shown that 98% of traders fail. We all know that. And that's almost a perfect match to the number of 96% of price moves being random. It is not a coincidence that these numbers are so similar when you consider that most traders don't understand the structure and nature of of the Forex market. Most people are simply trading Forex the same way they would trade stocks. That's like trying to play tennis, but following the rules of football. It is never going to work. The good news is, for traders who understand Forex, it's actually really easy to make money compared to other markets to start with, it's easier for us to make money in both directions. With stocks designed to go up. Selling them short is more difficult. There are even regulatory rules that try to discourage shortener stocks for speculative reasons. And the opportunities to short are far fewer because stock markets don't go down as often as they go up by design. Forex, on the other hand, is structured to oscillate within a range. And there are no restrictive regulations preventing us from trading in both directions. And prices go up and down in equal measure thanks to that equilibrium. Meaning we have far more opportunities to make money in both directions more frequently and with greater predictability. But the real advantage that no other market can offer is our ability to match one market against Another or the strongest against the weakest. And that is mistake number three. If you place a buy trade on the Euro US dollar chart, you are buying the Euro and selling the US dollar as a speculator. That means you are making two bets on two separate markets. You are betting that the Euro will go up in value and and the US dollar will fall in value. To make money you need to be correct with both predictions. But that may not be the case on that pair. If the Euro and the US dollar markets were both doing the same thing, either going sideways or both going up, for example, the pair chart would be flat and no profit can be made. But if you were looking at the individual markets, you can wait for the right conditions. And when you see that the Euro is rising and the US dollar is falling, you know the pair chart is going to have the biggest and the best trend. Now if we use stocks as an example, again, this is the General Electric share price over a 12 month period. And this is Microsoft over the same period. If you could combine them onto one chart and trade them against each other. If the strong stock has grown in value by 40% and the weak stock has lost 50% of its value when you put them together onto a comparison chart, the net effect would be increased and that chart would see much more significant change. There's far more money to be made there, isn't there? Well, you can't do that in stocks or any other market. But we can do it in forex. This is the real edge. In Forex we can mix and match the best currency against the worst. If the euro gains 20% and the US dollar loses 20%, the corresponding EUR US dollar payer chart will have changed value by 40%. And if you can identify those moves in advance, you will multiply your profits. As I said at the start of the video, your edge is a combination of being able to correctly predict the future price direction and catching the biggest moves to give yourself the greatest positive expectancy per trade. To do that reliably and consistently, you need to understand how the Forex market really works, which is very different to other markets. You then have to be able to avoid the 96% of random goals. Most price moves that are impossible to profit from, a randomness that doesn't exist in other markets. And you need to analyze the individual currencies to match the strongest against the weakest. If you're trading forex charts the same way you would trade a stock chart, you may as well be flipping a coin. These are the key principles to successful Forex trading. Understand this and you can become a millionaire. Now, if this has been an eye opener for you and you want to know more, watch out for my next video where I'm going to show you exactly how to make massive profits by matching the strongest currency against the weakest. It's a technique that I've used for over 20 years to make myself a millionaire. I really hope this has shown you something new and if you found this helpful or interesting, I would really appreciate. If you would like the video, leave a comment and subscribe. That would really help support the channel so that I can continue to produce lessons like this one for free. So I'll see you next time.