Hi guys, hi from Andrea Unger!
The path of a trader!
I’m answering here a message on Facebook from a friend of mine, a Facebook friend who contacted me a couple of years ago asking for my mentoring to become a trader.
Two years ago, when he explained his situation to me, I suggested him not to invest any money in my Unger Academy.
Am I crazy?
Not really! I gave him this suggestion because I believed he would not get any benefit from the education that Unger Academy could provide.
Simply because I thought that his approach to Andrea Unger was driven by the idea that Andrea Unger proved to be good so he can be good also for me and teach me how to become a good trader.
So he was not looking for something to grow his personal baggage of information, but it was only looking for somebody who was good in his mind not, caring about the content of what I could eventually teach and not evaluating if that kind of content was fine with him, if that was something he could cope with.
Not everybody is good for automated trading because this is what I eventually teach and not everybody can become an automated trader if he has not the proper mindset of doing so.
So why do I think that this is so important?
I believe that it is important when you approach an educational path to increase your skills, to understand first what direction you are willing to go and what could be good for you and then become a specialist on that by studying that specific topic.
I suggest automated trading because I believe that it is something that can be taught easier or can be learned easier, both sides, but not always this is the solution.
In this case, I believe it would not be a good choice at that stage for him because he was actually not really evaluating anything about automated trading.
He was just in a foggy environment about trading and thought about Andrea Unger because somebody told him that Andrea Unger was good.
I suggested him an online material so that he could increase his general point of view about trading or his overview.
I actually suggested him also to quit trading because his motivation was more driven from the necessity of an income and you know that I try to keep people away from trading if they just want to do it to make money, but he went on and he wrote to me yesterday claiming that he was now able to trade for a living, which I’m very happy about.
He also explained to me a little bit, that he’s specialized on trading gold.
I often suggest to diversify and here it comes a guy claiming that he makes money being specialized on a specific instrument.
There is nothing wrong with comparing the two point of view.
I can tell you that I strongly believe that diversification is a great tool to help to trade smoothly the market, but if you trade markets with a discretionary approach the specialization and the deep knowledge of a specific market helps enormously, because when you know a market deeply and heavily, obviously you become one with this market and when you trade that market you are in your environment, let’s say, so it’s a great help to be specialized on the market.
In automated trading, which is what I do, it’s not really necessary, obviously it always helps to know what the market does, how it behaves, but it’s not really necessary because you analyze a number of markets with the same tools and the same matrix and reading these matrices, these results, you define what to do and so in this case diversification is important because you distribute your efforts and your results on a number of different instruments, minimizing the risk of contemporary failure (I hope really it doesn’t happen tomorrow).
As a discretionary trader, you cannot focus on many markets and you need to focus on some, maybe one, becoming a specialist.
At the end of last year in China, I met the king of copper, it was a very nice guy who was extremely specialized in trading copper futures.
He was successful thanks to his deep knowledge of that instrument, so it’s fine if you are a discretionary trader to specialize on a market so that you know the evolution of the market and you know what is going on and what you should do to keep on being in profit.
The next thing he talked about was the performance, so he said that he made X percent in 2017, Y% in 2018 and he said that in 2019 he was more or less break even.
Well we are just at the beginning so this is not a problem actually, but the problem was the reason why he claimed to be breakeven and not successful.
He said: “I’m not able to make the aimed profits because of the reduction of leverage. I have no longer the 400 leverage, now new ESMA rules maximum is 30 and without the 400 leverage I can’t make the profits I was making, so I’m planning to change my broker with an Australian broker who is not yet linked to the ESMA rules in Europe”.
This is a problem actually and I’m answering to this friend of mine through this video.
If the profits you made are depending on the leverage and exclusively depending on the leverage you used, you are in great danger because you are heavily underestimating risk.
If you make money just because you use heavy leverage you must consider that you have been lucky making money in the last two years which was fine, I’m happy about that, but you are really risking too much.
You should consider whatever you have done throughout the two years, in a situation where: what could have happened if one or two trades went wrong, really wrong?
What would have happened in that case?
Because the fact that you were extremely good in choosing the entry the exit and whatever, it does not mean that nothing bad, really bad could happen and if leverage is the reason for your profits it means you were heavily leveraged which means if things went wrong you would have lost a lot, if not all the money you had.
So leverage should never be the reason and the profits should never be the starting point to analyze the results.
You should always start from the risk, also imagining scenarios which hopefully did not happen, but which could have happened and what would have happened in that case to my account.
Always be pessimistic when you analyze, so leverage is not the reason, I can tell you that the new ESMA rules are a great help for traders, because they protect you from taking excessive risk and they are still risky in my opinion, but there is no longer that excessive risk, because any strategy depending exclusively on high leverage has something wrong inside.
Many people would now justify saying: “Yes, but look I have this and that…”, okay, everything can be fine, but believe me, somewhere there is a weakness and if that weakness becomes a problem it will be a big problem!!!
So leverage is not the solution to become profitable, this is very important.
This is more or less it.
Whoever is really interested and motivated in mechanical automated trading, Unger Academy is the right place to go, but there are also other places, I mean I am not promoting myself here, I just said it.
But if you are just struggling in understanding what would I do to trade, what is trading, there is still something in the Academy that can help you.
Those who come to the Facebook page also find a link to an evaluation test to understand what level they are and what they should choose and so on, but this is a way to help you.
Maybe sometimes you know my answer is: “Forget about trading! Don’t trade!” this is something I often say and I believe that some of you who are listening to this video maybe are those who I answered please don’t trade, forget about trading.
It’s not a bad thing, I mean I’m not offending anybody saying this.
I’m trying to protect people when I have a feeling that they have a complete misconception of trading.
There are people who clearly approach trading with a completely wrong idea about trading and these people I normally prefer to suggest to keep away from trading, which is very important.
When somebody comes and thinks that you can make a lot of money studying a course of a couple of hours, I try to convince him that trading is not the place to be, because if he realizes this from the very start and listens to my words, he will protect his capital.
The other way to realize that is trading and losing money, which is obviously more painful than listening to my words.
I hope you don’t feel I’m arrogant saying that trading is not for everybody, I hope you take it the right way and when I suggest you keep away from trading you listen to me or maybe you explain me your reasons that I can obviously be wrong in my evaluation and I can change my mind, but if I feel that somebody would be harmed entering the world of trading I openly say it because I don’t want any victim on my personal path, as an educator of course.
That’s it guys, maybe I forgot something, please write your comments here below the video, I will try to answer them and we can open interesting discussions here because I think it’s something that has to be deepened further and further.
That’s it guys, ciao from Andrea Unger see you next time, ciao!