The Four Elements Of A Successful Forex System by Dean Malone.

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2 You may not want to hear this...but most Forex traders will fail. It is a proven statistical fact, and will more than likely never change. As a professional trader, this is definitely a pill that is hard to swallow. The second I open a price chart in the morning to begin my trading day, I know that I am battling some pretty terrible odds. Speaking strictly from statistics, the Forex market can move only one of two ways...up or DOWN. Because of this basic yet fundamental fact, every trade placed in Forex has roughly a 50% chance of moving into "profitable territory" at some point while the trade is open. Then why is it more than 90% of traders are unsuccessful? What is causing so many people to fail when each trade has a 50/50 chance of moving into profit? The answer may come as a shocker, but if you aren't able to turn a consistant profit in Forex, there is a good chance that your problem is...you. Allow me to explain... Apophenia - the act of seeing meaningful patterns in data that do NOT actually exist.

3 Let's do a quick experiment. When you look at this picture, what do you see?: Most everybody automatically recognizes this picture as a "face"... And most everybody would be WRONG. In reality, it is nothing more than 3 circles and a straight line. Our brains automatically recognize this "pattern" as a face, and we believe it without question. Not only do most all of us believe this picture is a "face"...we are willing to both fight for and defend our reasoning. Everybody experiences apophenia occasionally, and is a normal part of being human. Believe it or not, the same feature of our brain that recognizes this picture as a"face" (or can spot shapes in clouds) is responsable for the loss of thousands (if not millions) of dollars every single day in the Forex market...yet most traders have absolutely no idea this is happening!

4 What Makes Apophenia So Dangerous To Forex Traders? To better understand the problem, let's do the same "face picture" experiment with something a bit more relevant to the Forex markets. What do you see in THIS picture? (HINT: It's not a face...) Do you notice any type of pattern in this chart? Any areas of support or resistance? Where would your system tell you to place a buy? How about a sell?

5 Most 'skilled' traders would see quite a few things almost immediately: This is the same price chart as above, only with a few lines and notes drawn to highlight key areas of support and resistance, trend channels, a chart formation and two levels of clear breakout points. You've probably seen these types of trend lines and chart patterns before, and may have even noticed a few things that aren't drawn out on the chart. These would be some pretty great observations of a skilled trader, except... That is not a price chart.

6 In fact, this isn't a chart of anything at all. It is built completely by randomly generated numbers using a computer program. Yet...it seems to have all of the characteristics of a standard Forex chart, doesn't it? Right now, you may be wondering: "How can this be possible? How can this random chart share so many of the same characteristics as a Forex chart? A random chart has nothing to do with how the Forex market moves".....and you would be absolutely correct. The Forex market and this completely random chart have absolutely nothing to do with one another, and they do in fact "behave" differently...yet we are still able to easily identify some extremely striking similarities. This is exactly how apophenia can cause losing trades! You see, when looking at any price chart, our brains will begin to automatically identify patterns and formations that seem to make plenty of sense. We eventually become absolutely convinced of our findings. Our minds are bombarded with hundreds of different possible outcomes as we struggle to make sense of price movements. And the worst part? We begin to believe these ideas...and we are willing to fight for them. Let me ask you a question - when you became aware of the fact that the chart you were looking at before is completely random, how did you react? I'd be willing to bet a number of people reading this report didn't believe the chart was actually random even after I revealed it...and most likely these same readers still don't believe that it's random.

7 Eventually, the constant struggle between what is actually happening and what we THINK is happening becomes too much. How do you know what is real, and what is simply being imagined? Traders can spend YEARS "chasing their tail" in an attempt to find the "correct pattern" - the one elusive "truth" to the market that will make them millions. But for almost everybody, it doesn't come...and the Forex market claims yet another trading account (and probably the trader's sanity as well). So what do the professionals have that the rest don't? How can we as traders filter out these "imaginary" views of the market to be able to see what is REALLY going on?