The other day I was at a monthly BBQ with a bunch of forex traders where we basically drink a lot and argue the merits of different trading styles and methods. Anyway, I posed the following question to the group and the answers I heard were pretty surprising.

The question goes something like this

Suppose you knew a Forex trader who never seemed to win. Sure he’d win the odd time, but over the long run he always lost all his money. It was as though the market had an edge over him much like a casino does over a player.

Remembering that Forex is a zero sum game, which means every dollar lost is a dollar won by someone else, I ask the question

If our friend simply did the exact opposite of what he would normally do would he win $10,000 instead of lose $10,000?

(For the sake of simplicity this lucky duck gets to trade for free so lets assume he pays no commissions or bid ask spread. Lets also assume there are no psychology issues about doing the opposite of what he would normally do. Imagine some way in which he doesn’t even know it’s happening if you like.)

Why am I so sure you’ll get this wrong?

Because I’ve tested it and the odds are in my favor so it’s a bet I’m willing to take.

Answer the Question and Win a Trading Book From Amazon?

(not: the contest has ended. Results will be posted shortly)

Lets make this fun … put your answer with an explanation in the comment and when I post the solution in a week whoever I think has the best answer will win a book of their choice from our recommended reading list.

Now obviously there could be more than one winner in which case we’ll take the first one. Also be sure to put your real email in the email field when commenting or I won’t know who you are if you win and won’t be able to send you the prize.

Good luck

Sign up for our newsletter (see sidebar) and RSS feed and you’ll be first in line to hear about our next contest which rumor has it will be much bigger and will NOT require a skill testing question;)

For those who have already read the Forex Mentor review, I want to let you know it’s been updated to include the Forex Mentor table of contents for the 12 disks containing the hundreds of videos that comprise this forex course.  The table of contents shows the titles of each video you’ll receive as part of this excellent forex course and is definitely worth checking out.

If you haven’t read the review then be sure to do so as it will give you a better understanding of why we think this course rocks.

As a convenience you can also see the table of contents here

Forex Mentor Table of Contents

enjoy

After in depth review Peter Bain’s Forex Mentor training course receives a hearty two thumbs up from MrAutomate.

Forex Mentor is a Forex training course and mentorship program that actually delivers. What makes Forex Mentor such a great product is the sheer volume and quality of the content as well as the very generous support provided for the product. The course teaches sound trading principles and provides a real foundation for creating wealth with the help of an excellent support and mentoring team.

The Forex Mentor course contains over 20 hours of video that clearly demonstrates the techniques that has made Peter Bain so successful. Also included is a 2 DVD set containing a live seminar Peter Bain teaching his techniques. Equally as impressive is the 4 months of access to the membership site which contains over 150 additional hours of training video covering the whole Forex trading spectrum.

Want to see a full review of Forex Mentor, including a look at the video table of contents showing hundreds of video titles?

Full Forex Mentor Review

The other day I was flipping through one of my favorite books on trading, Market Wizards: interviews with top traders by Jack Schwager, and came across a great line by Richard Dennis

I Could Trade Without Knowing the Name of the Market

This line was in response to a question by Jack, “How much common behavior is there between markets? Are the patterns of beans the same as the patterns of bonds, or do the markets have their own personalities?”

Richard Dennis is one of the most famous traders of all time. Not only did he turn a couple thousandsdollars in to $200,000,000 over a 10 year period, but he was also a founding partner, along with William Eckhardt, of the famous turtles group.

Richard Dennis’ comment shows his faith in technical analysis over fundamentals when it comes to trading. Price action was king and everything he needed to know he got from the chart data. His trading style was mostly  trend following and a strong belief in systems trading based on solid risk management.

It was irrelevant what the chart represented, as long as it was trending he could trade it. For Dennis, and most of those who learned or were inspired by his success, trading was truly a numbers game regardless of the market.

If you haven’t had the chance to read The Market Wizards and the New Market Wizards, both by Jack Schwager, then you’re missing out on some of the best trading interviews ever compiled and an enormous resource of wisdom from some of the worlds top traders.

Also checkout the article Trading Is A Numbers Game.

While no one can predict what will happen in the market tomorrow, this by no means precludes you from making piles of money from the unknown, if you know what you’re doing.

For decades analysts and money managers have been trying to “value” a stock, or company, and predict it’s future value, based on various measures such alpha, beta, PE ratios, etc., but the one fundamental problem with these measures of prediction is that they are based on the subjective opinions of an analyst.

Successful trading of stocks, commodities or currencies is a numbers game and we can in fact make non-subjective predictions based on probabilities that will improve our performance and let us cash in big on the markets.

It works very much like your typical casino or insurance company and you can learn more about it in the new article Trading Is A Numbers Game.