How I Lost My Savings in the Forex Market and What You Can Learn From My Mistakes
By: Matthew Prince
Tags: Investment, Finance, Forex, Money, Investing

How I Lost My Savings in the Forex Market and What You Can Learn From My Mistakes Matthew Prince Follow Jan 1 · 6 min read

Photo by Travis Essinger on Unsplash

In 2015, I quit my low paying teaching job. It wasn’t just the pay. The hours and work I put in for a life I wasn’t happy with wasn’t worth it. I went on to build a network marketing career. Unbeknownst to me, the network marketing business was a network-marketing-like Ponzi scheme. The scheme crashed in a few months, leaving me jobless and desperate for a source of income.

I moved out of my parent’s apartment earlier that year, so I had to take care of myself and pay the bills that were staring me in the face. I was torn between going back to a 9 to 5 job or starting a business that will give me the liberty to work from home. I chose the latter. Isn’t that the dream? Working from the comfort of my home and making millions of dollars?

At that stage of my life, I was desperate and vulnerable; it was easy to fall into the trap of quick and easy money schemes, especially with the internet and social media usurped by people who claim to earn thousands to millions of dollars per-diem.

I was not the kind that believed everything I am told or what I see on the internet. So when I saw FOREX traders starting telegram channels and showcasing receipt of their earnings, I was skeptical. It seemed too good to be true. And you know what they say about anything that looks too good to be true.

I stayed on the sideline, observing. I observed for a few weeks, even though I already thought I was leaving money on the table (why does my brain have to lie to me?). Nonetheless, I didn’t forget my discipline so early. I picked up my first trading book, Market wizard by Jack Schwager, and then Trend following by Micheal W. Cowel and another and another. In two months, I had read over a dozen books on day trading and swing trading.

One more thing, I needed a mentor. I saw an ad on a local signpost. A trader was enrolling students for his training and mentorship program. We fixed an appointment. The next week I was in a multipurpose, shabby looking office with a talkative man who told me, for the umpteenth time, of the opportunity in the trillion-dollar industry and how he “crushes” the market trading like the huge banks. His training and the mentoring course was $200. I was down, even though I didn’t check his self-acclaimed track record of success in the market (so much for an intelligent guy). The training started, and all he said were things I had read in my books.

If he uses the candlestick, trendline, support, and resistance in crushing the market, then I can too. That was the holy grail confirmation I needed.

Feeling like a Wall Street trading guru, I was ready to kick asses in the market. Why not? I knew about the emotions of fear and greed that influence a trader. I knew how to draw trendlines, support, and resistance line. I knew the meaning of FOMO, and I knew I should buy the rumors and sell the news. I was ready.

If you look me in the eye and see nothing else, you’d see that I am intelligent and disciplined (at least so I thought). Intelligent people don’t leap before they look. They use one foot to test how deep the water is before they jump in. That’s exactly what I did. I tested the water with just a few dollars in my trading account. Demo trading account is for unserious people who are too scared to lose a dime. That wasn’t me. One can never know how it feels to lose money when trading a demo account. And losing money is inevitable in trading. The goal is to break even and become profitable.

My First Month As a Trade.

I started my trading account at $300, enough to get the feel of trading. I already had a strategy; trading price action, candlestick set up with support and resistance confirmation, 2% maximum stop loss. All were supported by my so-called mentor and the myriads of books I had read.

Looking back, at the end of the month, I had crushed the market. I was up 14% for the month. I was ecstatic. I could already smell my Lambo. I grabbed a piece of paper and did the math. If I invested all my savings, I would make enough to live. I could travel the world, trade by the beachside, and sleep in a penthouse.

My Second Month As a Trader

I was sure I had cracked the trading code. I invested all the money I had in my account. It didn’t feel hard. I tested the waters the previous month, and it tasted like wine. Remember?

In excitement, I set up my trade on the first day of the month. The day after, I checked the positions. 80% of my open trades were in the red. My heart sank. But as a pro trader who knew losses are inevitable, I could handle that. I had read about traders who close trades just before prices skyrocket. That couldn’t be me. I opened some more trades, pretending to be unfazed. The next time I opened my trading account, I was down over 60%. I was sick to my stomach. I stared at my computer screen, almost tearing up. What was I to do next? A 60% loss isn’t recoverable. I was doomed. I closed all trades and withdrew the money that was left.

What I Learned

The trading profession is full of charlatans: The people showing cars and trying to sell you a course are probably making all their money from the sales of courses and not from trading. Don’t be like me. If you must learn to trade, do your due diligence on the tutor. Be sure to check the trader’s two-years trading history. A month or two of profitable trade may have been because of luck and not skill. Don’t be fooled by beginner’s luck: While it is wise to test the waters, be sure to take your time before jumping in. you might be lucky to have some pleasant months, and that doesn’t mean you are ready to go all in. You are not as special as you may think: When I was reading all I could on trading, I had known that only 1% of traders are profitable. For some reason, I believed I would be in the 1%. 99% is probably not as smart as I am. Laughable, right? I paid dearly for such irrational optimism. If it looks too good to be true, it probably is: We have all heard this axiom time and time again, but when it is time to adhere to it, we forgot. Every good thing comes with hard work and perseverance. Set attainable goals and work towards them with diligence. Fast money may cost you more than you bargained. It’s not what you know, it’s what you do: Before I traded, I knew about beginners luck, about the law of small numbers (you shouldn’t make conclusions from a small sample size), I knew that I should stick to a small trading size. I knew them all, but I didn’t adhere to what I knew. It’s comparable to a smoker who knows smoking is bad for health but can’t quit. Self-awareness is key. Understand yourself and know if trading is for you.

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