Sunday, August 8, 2010

The Biggest Issue of Online Forex Trade Learning Sources : The IMO Problem

Like most of you, when I first started to learn about forex trading and how to make it in this business my first source of information was the Internet. When I began to learn how to trade the Internet was already flooded with millions of pages with information about trading and dozens of forums with hundreds of posts telling me what I should be doing and how I should be doing it. However after a lot of years have passed I can tell you that this initial "online education" was more detrimental to me and my trading than what it was positive. If I hadn't had access to online learning sources I would have probably started being profitable much earlier. On today's post I will share with you the reasons why I think most online sources are destructive, why they turn out this way and what you can actually do to filter your online learning so that you keep the best and eliminate all of the things out there that are simply misguiding you and probably making your trading far worse.

I called this post the IMO (In My Opinion) problem precisely because one of the biggest problems in online learning is the fact that the credibility and reliability of the sources cannot be verified. For example, thousands of people post on forums and everything is done in an "IMO" manner. People give their opinions - usually without any form of support - leading you to believe something is true which probably is not. The problem here is not that people want to learn and share but the problem comes down to the fact that there are no hard facts behind what people are saying.

I remember that when I was starting I was a fan of some of the most popular forex forums online (now at least, back then they were beginning) and people used to tell me different things all the time that would be confusing to me . For example, other users would tell me "use an ADX to filter ranging markets" but there was no hard evidence behind this. People never showed me any system that showed an improvement when this was done with statistically convincing evidence (like a simulation of some sort) or a real track record that showed that this was indeed the case. The reason behind all of these suggestions is usually the very limited experience of the users and the excuse behind it is usually given as "IMO".

New traders are very vulnerable to what they are told - since they have no experience of their own - and therefore they are prone to believe whatever people who might appear more experienced tell them. Anyone could start a forum post, a blog or a website saying that they know how to do things and that they have the experience but finally what helps you learn is not opinion but hard facts and evidence. When you are learning to trade, you have to bear in mind that "IMO" is not good enough and that everything someone tells you needs to be backed up by some form of tangible and measurable evidence.

This is the reason why most online learning sources were detrimental to my learning, I was exposed to a lot of "IMO" and I attempted to try everything since I couldn't actually know the real experience or profitability of the people behind the wheels and there was almost never evidence showing that there was some substance behind the suggestions and reasoning being made. For this reason I developed what I have heard people call a "scientific approach" to trading, which means that I take decisions and use systems and tactics based solely on evidence and not on anyone's opinion (not even my own). I finally found that this was the only approach that worked for me since results were tangible, measurable and verifiable by anyone else. At last I found a way in which I could learn how to trade that was not subjective.

My advice to you then is to put a LOT of focus into the actual evidence presented around what people say and to only follow advice - if there is any evidence presented - after you do your own analysis and make your own conclusions from what is being shown. If somebody tells you, do this or do that "IMO", you should just ignore it and focus on advice which is not based simply on mere opinion but on track records, analysis, understanding, etc. Having objective advice, based on actual evidence is invaluable and something which would have boosted my learning process incredibly. I am also not asking you to take this advice blindly (which would be contradictory) but I encourage you to give both approaches one month and see which one better improves your trading. For me, after years of spending time learning in a disorganized online environment a focused, objective and evidence-based approach finally worked.

If you would like to learn more about my journey in automated trading and how you too can learn to use and understand automated trading systems through an evidence-based method please consider joining, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach to trading systems. I hope you enjoyed this article ! :o)


felidae said...

Great post Daniel! I've traded shares for some time but was only introduced to FX a couple of months ago. I completely agree with your account of the newbie experience in that most of the info out there is either IMO or even POMA (pulled out my ass)!

Your scientific approach has already saved me from making some of the common newbie mistakes. Nowadays I cannot imagine risking my money on a system that has no evidence and at the same time managing to keep a level head!

Daniel said...

Hello Felidae,

Thank you very much for your comment :o) I am glad you agree with my opinion and that you have found the same through your personal experience. Definitely I believe that most online learning sources are well-intentioned, but their lack of proper support and evidence is just detrimental to what new traders need in order to achieve success. Or at least it was for me.

I am also glad my approach has helped you and that you are now focused on evidence and understanding, definitely it is much easier to trade systems you understand which have clear evidence of their profit and draw down characteristics :o)

Thank you very much again for your comment :o) !

Best Regards,

Daniel Fernandez

townjet said...

Good Post Daniel,

One of the toughest things for me is when someone does ask me for advice. Sometimes I full out recommend something based on my experience, but pull it in a little to keep the individual cautious and try to get them to invest in some research of their own. I find that many times even though cautious advice is given, people just want to jump in (typically this is the greed bug). I've even had people come to my blog and argue with me on things I have said but ignore my cautious word and focus only on a few sentences I have written where they place their arguement. There is a lot to be said about having facts and evidence, most assuredly. The best thing I have found for myself it so procure the facts and evidence myself as anymore nowadays it is hard to believe anything anyone writes. True Wisdom is really only gained through ones on failures and successes, everything else is just guidance.
Great post Daniel and I don't at all feel bad about directing any newbies that hit my blog to seek out your blog. You have a lot of great guidance.


Daniel said...

Hello JT,

Thank you very much for your email and kind words about my blog :o) definitely what you say is wise, learning comes through experience and guidance comes through advice.

Profitable traders are made through their experience and very very few are made through the experiences of others. If it was easy for people to learn from other people's mistakes in trading nobody would trade martingales or systems without evidence but time after time I have found that people need to try things and have some experiences on their own before they start to realize what trading is really about.

I guess it is human nature to believe that what you "dream about" is possible and that these "trading illusions" portrayed by some people in this business can become realities. I guess we all need to walk this journey but I continue to believe that some people do see the sign posts I try to put along the way :o)

Thank you very much for your comment JT :o) I am also a big fan of your blog and continuously monitor your progress and efforts !

Best Regards,


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