Financial Freedom through Automated Trading

Financial Freedom through Automated Trading

The road to Financial Freedom

The problem is that most people is not willing to take steps on that road. Unfortunately people usually prefer to believe in magic and do nothing to reach their goals. People fear the instability of working for yourself, the probability of failure, the responsibility to maintain your family, ... anything is an excuse to avoid taking steps in the right direction.


The list of steps to reach Financial Freedom

You want to reach financial freedom through automated trading? Great. Let's do a list of what is needed:

  • Chart reading skills: If I want to build automated income systems that read charts I need to know how to read charts. So I must learn, I need to take a course. I must study a lot until I master chart reading and and I have to invest hundreds of hours reading charts (practice).
  • Statistical background: So I must understand basic statistics, study a lot of statistics and invest hundreds of hours analyzing strategies so that I know by myself the quality of a strategy without the need to believe in the vendor, the forum members or whatever.
  • Basic programming knowledge: at least the minimum skills to feed your statistical tools with data, even if you delegate the programming tasks. Personally I think it is required to know how to program an EA.
  • Develop a skeptical mind: so you are able to accept only what you can prove scientifically by yourself and avoid all the marketing magicians in this industry
  • Become part of a circle of think alike minds: I want to talk about my interests and get meaningful feedback. So I want to become part of a group interested in reaching financial freedom through Automated Trading
  • Risk management knowledge: so I understand the essential relationship between risk and profit and I am able to maximize the returns while minimizing the risk.
  • ...

The list is personal and incomplete, as everyone must build it's own, but at least all that seems obvious, right? Those are some obvious skills that I would like to get if I want to reach financial freedom through automated trading.

If 10 years ago, when I was not interested in financial markets, someone asked me what would be the list of things to succeed in automated trading I would probably have written something similar. And the reason is that it is almost the same always for any goal: Skills, Hard Work, Practice, Method, Mind and Team. Common sense.

Unfortunately nobody did and I believed that trading was a quick shortcut to easy money. I had to realize by myself after many failures that something was wrong. It was then when I took "the red pill" and started to work in the right direction.

The reward of walking the road

The reward of performing all the previous steps is achieving Financial Freedom. Maybe become so wealthy that your effort might solve the life of your children too so that they can become whatever they want without economical constraints.

It seems not too much effort for the reward you can get. Maybe 2 years of hard work and then you are in the 5% of people that constantly get's money from the market. And another year or two to reach Financial Freedom.

Why people don't reach their goals then? The reason is that they don't want to work on the necessary steps to reach those goals. They need immediate satisfaction.

What a weak trader is doing right now in automated trading to reach Financial Independence?

So we know what we must do to reach financial independence. Let's see what a weak trader -commonly called "the herd"- is doing everyday:

  • Search the forums for the hidden gem EA with a magical solution to the markets
  • Trying to beat the market switching on and off it's EAs based on gut feeling due to short term results
  • Search the forums for a cracked copy of the latest EA
  • Participate in forums posting it's small wins and hiding it's big losses
  • Searching for the ultimate indicator in ForexTSD as it has some small space still left in it's screen
  • Filling it's trading terminal with dozens of EAs based on forum or vendor's backtests
  • Taking emotional decisions, usually involving increasing risks after losses
  • Improving his spreadsheet of compounded gains
  • Bashing brokers and EA vendors
  • Believing in the next magician that had a good strike buying gold and published it's results, just to try to make the same and loss all his money (and the magician has left the city to hide his own losses)
  • ...

This behavior is very obvious -and sad-. And is performed by 95% of forex traders.

Did you know that the "herd" behavior related to financial markets is perfectly documented since the end of XIX century? Did you know that the Smart Money knows exactly how to earn money from this herd behavior?

What group do you want to belong to?