Why do so few traders succeed in the Forex trading environment while the vast majority of traders fail to achieve success? While there is no definitive answer to this question, there are a few things that will put you one step ahead and will turn the odds in your favor.
The main purpose of this article is to guide you through some of the important aspects of Forex trading. But in a different way, instead of telling you what you should do or the best way to do it, it will tell you what to avoid. Sometimes it is better to identify the main drawbacks in a discipline and then isolate them so that we achieve the best results at a given level of development.
The quest for the Holy Grail
Many traders spend years trying to find the Holy Grail of trading. That magic indicator or set of indicators is known only to a few traders and will make them rich in no time.
Reality: There is no magic indicator or set of indicators that will make anyone rich in no time. The main reason for this is that the market changes and every moment is unique. Every Forex trading system will fail from time to time. Our job here is to find a Forex trading system that fits our personality as traders, otherwise, the trader will have a hard time following it.
Looking for Easy Money
Unfortunately, most traders are attracted to the Forex market for this reason. This is mainly because of the publicity that shows, or rather tries to show, how easy it is to trade and make money in the Forex market.
Reality: Yes, trading is very easy, anyone can do it. It is as hard as a single click. But the second part is not so easy. Making money or achieving consistent profitable results is hard. It requires a lot of training, patience, discipline, and commitment and this list can go on forever. In a few words, having consistent profitable results is possible, but it is not easy.
Some other traders are attracted to the Forex market or any other financial market because they think being a trader is exciting.
Reality: Yes, trading in the Forex market is very exciting. But if that is still the main reason why you trade the Forex market, sooner or later you will discover the most expensive adventure you have ever known. Think about this for a moment.
Not Using Money Management.
Most traders forget about this important aspect of trading. They think they shouldn’t use money management until they achieve consistent profitable results. They completely forget about the risk side of trading.
Reality: Money management ensures that your profits increase geometrically, but it also limits your risk on each trade. Money management tells you how much to risk on each trade. Using money management is a must if you want to achieve your trading goals. By using money management you make sure that you can trade tomorrow, next week, next month, and in the years to come.
Not Being Adjusted to Psychology
This is one of the most underestimated issues when it comes to trading. One of the main principles of financial markets is that the price of each instrument is based on each participant’s perception of the “crowd”. In other words, the price of each instrument is determined by the fear, greed, ego, and hopes of all investors.
Reality: Being aware of all the psychological issues that influence the decisions made by traders will turn the odds in your favor.
Lack of Education
Education is the foundation of knowledge in every discipline. As lawyers and doctors need several years of college before they get their degrees, Forex traders also require many years of education. Since some knowledge can lead you down the wrong path, it is better to have someone experienced to guide you in your trading.
Reality: The market teaches us invaluable lessons with every trade made. The education process for a Forex trader can last forever. That’s right, we never stop learning. We must be humble about the markets and our knowledge; otherwise, the market will prove us wrong.
These are some of the most important obstacles that every trader faces when trying to trade successfully.
Trading the forex markets successfully is not an easy task, it requires a lot of hard work to get it right, but with the right education, you will bring yourself closer to your trading goals.