Twenty years ago, Allen Gold would trade Forex while sitting at his local McDonald’s. Today, the 56-year-old has achieved financial freedom through trading. He travels around the country and spends a lot of time in Hawaii with his family.
What is Allen’s secret? The Funded Trader CEO Angelo Ciaramello recently spoke with him about his incredible simulated trading journey. In this insightful interview, Allen discusses how he built a simulated trading strategy. He also shares his thoughts on how taking smaller percentages of a run may just have a higher potential for success than always shooting for 100%.
In this article, we break down his inspiring tips on how to become a successful trader. Enjoy!
Building a simulated Trading Strategy
Allen started as a scalper. However, he soon found this stressful because he had to scalp a lot to achieve a positive risk-reward ratio. What’s more, he also had to cover the spread, commissions, and slippage. This made it difficult to maintain consistent profitability.
Today, Allen has four $100,000 funded accounts. He trades each account differently and employs distinct strategies for each one. Also, he primarily does daily trading, where he looks at the monthly and weekly trends to determine the direction of the market.
Here are some key takeaways from Allen’s successful career:
- He takes one trade per day, focusing on higher time frames for better accuracy. According to Allen, trading larger time frames is easier and more effective.
- He aims for a 3:1 or 4:1 risk-reward ratio. This way, he offsets losses with a few successful trades to achieve profitability. Even with a relatively low win rate, he can still generate virtual profit..
- Allen says the market’s behavior often defies statistical expectations. This means consecutive losses can occur before a winning streak emerges. So, it’s crucial to remain patient and avoid self-doubt.
Adaptability Is Key To Reaching Financial Freedom
Allen says every trader must learn to adapt. Over his 20 years of trading, he’s noticed the markets repeat certain cycles. However, despite that finding, seeing the exact same setup repeatedly is unlikely.
No matter how much research, studying charts, and backtesting you do, you can never precisely predict the trade. So, Allen advises to stop looking for perfection and precision—and don’t expect to win 100% of the time. Instead, focus on small wins, which add up over time and lead to financial freedom.
The Advantages of Smaller Percentage Gains
Allen’s strategy is simple: When the market is rising, you buy; when it’s falling, you sell. The specific time frame doesn’t matter as long as there’s a clear trend. The key is to exercise patience. “If you follow this approach, you’ll win 85% of your trades,” he says.
Allen’s approach differs from the conventional mindset of always chasing big wins. Instead, he believes in surviving the market and focusing on not blowing up your accounts.
This is a common pitfall we’ve also noticed. Only 10% of people who attempt our challenges go on to win funded accounts. Out of them, only 2% are able to keep their accounts. This happens because traders start taking bigger risks.
Three Lessons for Financial Freedom
Here are three key takeaways from Allen’s strategy that can help you find success:
- Small Wins Are Better Than Big Risks: Allen has been simulated trading for two decades. The reason he’s survived so long is that he takes small risks and trades when he’s sure of the setup. He also analyzes the market daily. If he sees a pair that’s rising for three or four days straight, he’ll take the trade.
- Don’t Overthink: Once you’re sure of your setup, don’t overthink it. Believe in your strategy and place your trade. Many new traders make the mistake of hoping the market will move according to their intended setup. On the contrary, you should look at what the market is giving you. Adapt your strategy and place the trade.
- Take Virtual Profits Quickly: Allen says if he has an 80 pip virtual profit target, but the market is moving sideways, he closes the trade at 65 or 70 pips. He doesn’t double down to wait for his intended profit. A smaller win is still a win, and that’s money in the bank. In short, don’t be greedy with your trades and take virtual profits quickly.
Journey to Success
Allen went through several ups and downs in his simulated trading journey. In fact, he says he was facing the same problems 20 years ago that many new traders face now. He had a day job while he hunted for a “perfect system” that would generate virtual profit for him.
Allen shares this advice for new traders to achieve success and financial freedom:
Take a Step Back
At the beginning of his simulated trading journey, Allen would over-trade. For instance, he would get up in the middle of the night to check Asian markets. He would also waste several hours anxiously waiting for a setup. Soon, he realized these were bad habits he needed to break.
That’s what he advises new traders to do. If it’s getting overwhelming, take a step back and assess your simulated trading style.
Don’t Try To Outsmart the Market
Allen spent five to seven years learning about Forex trading. He backtested his strategy and “learned by fire,” making mistakes and blowing up accounts. He advises new traders to never try to outsmart the market. Allen says this is one piece of advice that can save new traders from years of unprofitability.
Take a Break
Forex simulated trading can be addictive, so it’s essential to take breaks. Allen has set his simulated trading rules—whenever the market is in a range, he takes a break from trading. He also travels a lot (with his trusty laptop) and trades from different parts of the country. True financial freedom lies in being able to trade from anywhere, anytime.
Become a Funded Trader To Achieve Financial Freedom
Our funded traders may come from diverse backgrounds, but they all have a few things in common. Just like Allen, they’ve spent a considerable amount of time educating themselves on Forex simulated trading before dipping their toes in it. They can predict the market with more accuracy because they understand fundamental and technical analysis.
We advise all new traders to practice their skills before they start live trading. This way, you’ll be better prepared to manage a funded account and achieve financial freedom.
Ready to take the next step in your simulated trading journey? Get started today.
