GUIDE ON HOW TO IMPROVE YOUR TRADING RESULTS STRAIGHT AWAY Learn an extremely important, yet simple tweak that can dramatically improve your performance IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM
Whether, you are a new trader or, even if you have been trading for years, this professional guide will show you a simple tweak that could improve your results overnight! About Us Our Key Trainer: Fotis Papatheofanous, MBA Fotis, as you would expect from his name is the key trainer at the Fotis Trading Academy. Fotis is a highly reputed, extremely driven and successful Global Macro Trader and Portfolio Manager. He brings the power of his institutional trading experience and discipline to the Academy and benefits from an uncanny ability to explain complex issues in a very easy to understand way Fotis specializes in analyzing global macro events and data to enable him to hone in to specific markets to trade. In the case of Forex, this knowledge lets him know which pairs to focus on in order to have the best chance of achieving positive, profitable results. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 2
WHY DO MOST TRADERS LOSE? THE TRUTH BEHIND THE NUMBERS AND THE SECRET TO SUCCESS! Why do most retail traders lose money? Most new traders are focusing too heavily, on the number of wins, the frequency of successful trades, rather than the profitability of each win. They wind up purely gambling away their money. Recent results published by brokers show that 90% of retail traders lose money, despite the fact that over 60% of their trades are winners - how can that be? It s because they lose more money in their losing trades than they win in their winning trades: they are losing more money than they are making. So how do you resolve this situation? Imagine you went to a horse race meeting and backed the favorite in every race. Yes - you will have a high number of winners BUT the odds are poor and therefore you are likely to end up losing money. The money you will make when you win, will not be enough to compensate the losers. It s exactly the same for retail traders. Many of our students here at the Fotis Trading Academy have increased their average profit per trade, from around 30 pips to over 300. It s actually easier than you may think. First, let s look at the 3 Step Process, we use here at the Fotis Trading Academy when trading the markets. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 3
The Math Now let s delve a little deeper into the proof of how to stack the mathematics in your favor. A few years ago the Forex Broker FXCM analyzed over 12 million trades by retail clients and the results were astounding! The chart below shows the trading results on the 15 most frequently traded pairs. The blue bars show the percentage of trades that ended with a profit; the red bars show the percentage of trades that ended with a loss. Traders of EUR/USD for example, were profitable on 59% of their trades and unsuccessful on 41% of their trades. So if traders are in the right direction more than half the time, what are they doing wrong? IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 4
In the chart below, we can clearly see that the average losses are bigger than the average gains. The edge gained by sound analysis and directional accuracy is instantly lost. Traders lose more money on their losing trades than they make on their winning trades. Looking again at the EUR/USD: EUR/USD trades were profitable 59% of the time with an average profit of 65 pips. Trades were unsuccessful 41% of the time with an average loss of 127 pips. Despite traders winning more than half the time, their winning profits were only half the size of their losses and - as a result they lost money overall. The results for the volatile GBP/JPY pair were even worse. Traders were winning an impressive 66% of the time in that s twice as many successful trades as unsuccessful ones. However, traders made an average of only 52 pips on winning trades, while losing an average of 122 pips on losing trades. They therefore lost money overall. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 5
Cut Your Losses Early, Let Your Profits Run When your trade goes against you, close it. Take the small loss and then try again later. It is better to take a small loss early than a big loss later. Conversely, when a trade is going well, do not be afraid to let it continue working. This is harder for some than cutting losses, especially if you have just experienced a string of losses. But it is the only way to tip the graph in your favor; experience and knowledge will build confidence. Resist the temptation to take profits off the table or to wait for the inevitable turnaround to eradicate the losses. This is how you lose money trading. It s a simple rule but it s not always easy to execute. How to Do It: Follow One Simple Rule Always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. This is called a risk/reward ratio. If you risk losing the same number of pips, as you hope to gain, then your risk/reward ratio is 1-to-1 (sometimes written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 1:2 risk/reward ratio. If you follow this simple rule, you can be right in the direction of just half of your trades and still make money. This is because you will be earning more profits on your winning trades than what you are losing on your losing trades. You should always use a minimum 1:2 ratio. However there are lots of potential trades. Remember, the higher the risk/reward ratio you choose, the less often you need to correctly predict market direction in order to make money trading. Making Money as a Forex Trader and the Risk of Ruin Matrix Let s now take a look at what it takes to move from being a break-even trader to a profitable one. There are two options: either your risk reward must increase, or your accuracy must improve. Increasing your risk reward is the best option because accuracy is not usually as consistently dependable. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 6
As you can see in the chart, with a risk/reward of 1:1 you have to win 50% of your trades to break-even. As your risk/reward moves up you can win fewer of your trades and still break-even; a risk reward of 1:2 requires only winning about 33% of your trades to get to break-even, and a risk reward of 1:3 requires you only to win about 25% of your trades to break-even. If you want to be a trader who simply makes 1R profit on each trade, you have to win 66% of time with a risk reward of 1:1, 50% of the time with a 1:2 risk reward, and with a 1:3 risk reward your winning percentage can be as low as 33% to make a 1R profit. Risk Reward is a concept every trader must understand and it is the key to successful trading Of course, once risk reward is understood the long term profitable trader also needs the accuracy and for that he needs to develop a trading edge. It s all about increasing your odds, improving probabilities and becoming consistent. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 7
The Focus Should Be On the Reward! Reward against risk (percentage gain against percentage risked) is a vital concept in trading. Some reasonable numbers to build on are 42% winning trades to losing trades with a 2:1 profit to loss ratio. The risk of ruin matrix is based on 100 trades with a possible draw down of 40%. According to this Matrix, if you do 100 trades (all executed following the same rules) and you have 42% winners to losers, and you pull out $2 for every one you risk, your probability of ruin is less than 14%. What Is The Most Important Information In The Risk Of Ruin Matrix? Having a high winning percentage is not an indication that you will be a net winner. If you were to have a 55% win ratio with a 1:1 risk to reward, your risk of ruin would be higher at 27%. The bottom line is that it is much better to trade less often for bigger rewards. A 42% Winning Ratio with a 1.6:1 would also work well. It would mean that you would gain 1.60 for every 1.0 that you risk. For example, if you risked 40 pips you need to look for 64 pips in return. Does that mean you close your trade after a 64 pip move in your favor? No - you adjust your stop to preserve profits should the market turn against you. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 8
How to Trade Like a Professional Our approach at the Fotis Trading Academy provides a trading EDGE that will take you from being an amateur trader to a professional by propelling your results to new levels. Professionals at hedge funds and large investment banks apply a top down approach to analyze what s happening around the globe and estimate where the price of a particular currency is heading before it happens. You need to understand that all financial markets are inter-related and how action in one sector is often a great indicator of what will happen next in others. Once you have this knowledge, it ll be you who calls the trading shots. You must have this kind of knowledge and an understanding of the macro environment, to put all the pieces of the puzzle together, before using your technical analysis to pinpoint entries, stops and targets. Adding the global macro string to your bow is what will give you the confidence to stay in trades longer and reap greater profits from every trade. This kind of knowledge and this professional approach will put you among an élite group of traders who really understands what is happening around the world financially. Once you have mastered it, you will have the potential to trade futures, CFDs, commodities, indices and stocks as well as manage your own portfolios and pension arrangements. Macro-Economic Fundamentals isn t rocket science and with our help, within just a few short months you will have the skills to take your trading to a whole new level. If you wish to improve your results you must reject the reactive strategies that most amateur traders use in the hope of making profits. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 9
EXAMPLE 1: LONG TRADE ON EURUSD DAILY CHART In this case, we applied STEP 1 and we determined that due to specific Fundamental factors, the EUR was a good candidate for a long position against the USD. We then moved to STEP 2 to determine the structure of price and who is in control, either the buyers or the sellers. Applying STEP 3 then was the easiest thing to do, since we had a strong conviction about the trade and our proprietary strategies and tools, we share with you, showed us exactly WHERE to go Long and WHERE to place the Stop. After the entry, our goal was to go for a multiple Reward versus the Risk we took. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 10
EXAMPLE 2: SHORT TRADE ON GBPUSD 4H CHART In this case, we applied STEP 1 and we determined that due to specific Fundamental factors, the GBP was a good candidate for a short position against the USD. We then moved to STEP 2 to determine the structure of price and who is in control, either the buyers or the sellers. Applying STEP 3 then was the easiest thing to do, since we had a strong conviction about the trade and our proprietary strategies and tools, we share with you, showed us exactly WHERE to go Short and WHERE to place the Stop. After the entry, our goal was to go for a multiple Reward versus the Risk we took. IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM PAGE 11
There is a solution and we can help you! WE can show you EXACTLY why you lose and more importantly, we can show you how you can finally turn this around and get the future you deserve! How bad do you really want to feel the success? Visit our website and find out MORE! www.fotistradingacademy.com LEARN TO TRADE & INVEST LIKE A REAL PRO! IMPROVE YOUR RESULTS TODAY FOTISTRADINGACADEMY.COM