「KOL Analysis•Jeffrey Gi」What is a trading genius?

How to know whether a trader a trading genius？ In my opinion there is only one way to tell: is the process of making money stable？

People who do not make money are certainly not geniuses. There are two types of people who make money: the first type experience much ups and downs in the process of making money. Take a look at the trading records of them and you'll see that they apply high leverages, so even a few points of market movement in their favor may convert into tens of thousands of gains in a few seconds. The second type make steady profits, and their trade records often show losses and gains taking turns: a profit of 1,000, then a loss of 300, a loss of 200, a profit of 800, a loss of 400, and a profit of 1500....but ultimately the gains outnumber losses.

Although the general ledger of the first type of trader may appears to be profiting, sometimes even tremendously, but as long as they stay in the market, they may eventually end up losing everything someday, drawing a sad period for their trading career. This type of trader are actually no more than irrational gamblers. But in a world where one is defined by what he achieves, people tend to worship and praise those traders when they make a fortune in the market by calling them genius and masters. Yet this is simply a common myth. The reason for this type of traders to make big profits or losses is that they base tradings mostly on speculation. Every execution is essentially an all-in game, and they either make it or break it. Such behaviors and the consequences are actually backed by a wrong concept: as long as people are smart enough, they can predict the future.

The human nature of greed cannot be completely controlled in trading, and the only way to solve this problem is by implementing a personal trading plan. The illusion that the future is predictable will make the trader obstinate and overly confident. In that case the trader's greed will uncontrollably fuel into his trading, as he seek to gain more money with even higher leverage. Suppose the trading process is funded by an endless cash flow, this approach can bring the trader huge success as long as he can afford the price of occasional losses. But the problem is however rich a person may be, he can't have such infinite wealth and with the trading method, he'll lose everything once he slip.

Meanwhile, the second type of trader's transaction records often show impressive earning stability and fund security. Although the general ledger profit does not appear to be outstanding, it can be seen that this type of trader have good risk management plans. In the long run, these traders are bound to profit. They believe that people cannot predict the future, so the only thing you can do to deal with future risks is to prepare for it by making plans. With that, the trader's greed is also controlled within a reasonable degree. In terms of operation, they typically trade with a moderate amount of funds, and the degree of loss is limited and minimized to an acceptable range through risk management scheme. In their trading there will never be such thing as a heavy loss that cost all of the principal.

Therefore, whether the trading is profitable, even significantly, is not the only criteria of deciding if someone is a genius trader. This is just one of the standards. What matters more is the rationality and stability of the profit method. Trading geniuses are not necessarily those who make the most money, but they must be the ones who can achieve the steadiest profits. As for those traders who often publish some excellent trading results on Facebook showing 100% winning records without losses, it's safe to say that they are genius - in cheating people.

[About The Author]

Jeffrey Gi, journalism graduate with an IT degree from Singapore.

Management University, forex columnist for No. Peripheral. Jeffrey is also the author of a popular forex trading strategy guide published in 2015 which received the highest 5-star rating from Amazon, and he is frequently invited to share forex trading experience in Cyprus, Poland, Taiwan(China), India, Bangladesh and Southeast Asian countries. He used to be a lecturer of FXTM and a guest forex commentator of Bailihui Group.

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