Why is it that very few traders succeed in the Forex trading
environment while the grand majority of traders fail to achieve success?
Although there is no hard answer to this question, there are a few
things that will put you one step ahead and will definitely put the odds
in your favor.
The main purpose of this article is to guide you through some
important aspects of Forex trading. But in a different way, instead of
telling you what to do or the best way to do it, it will tell you what
to avoid. Sometimes it is better to identify the main drawbacks on a
discipline and then isolate them so we have the best results at a
certain level of development.
The search for the Holy Grail
Many traders spend years and years trying to find the Holy Grail
of trading. That magic indicator or set of indicators, only known by a
few traders, that will make them rich in a short period of time.
Fact: Well, there is no magic indicator, nor a set of indicators
that will make anyone rich in a short period of time. The main reason
of this is because market changes, every single moment is unique. Every
Forex trading system will fail from time to time. Our work here is to
find a Forex trading system that fits our personality as traders,
otherwise the trader will find it hard to follow it.
Looking for Easy Money
Unfortunately most traders are attracted to the Forex market for
this reason. Mainly because of the publicity showing or rather trying
to show how easy is to trade and make money in the Forex market.
Fact: Yes, it is very easy to trade, anyone can do it. It is as
hard as one click. But the second part of it isn't that easy. Making
money or achieving consistent profitable results is hard. It requires
lots of education, patience, discipline, commitment, and this list could
go to infinite. In a few words, it is possible to have consistent
profitable results, but definitely it is not easy.
Looking for Excitement
Some other traders are attracted to the Forex market or any
other financial market because they think it is exciting to be a trader.
Fact: Yes, it is very exciting to trade the Forex market. But if
this is the main reason you are still trading the Forex market, sooner
or later you will discover the most expensive adventure you have ever
known. Do some thinking on it.
Not Using Money Management.
Most traders forget about this important aspect of trading. They
think they shouldn't be using money management until they achieve
consistent profitable results. They totally forget about the risk side
of trading.
Fact: Money management allows your profits to increase
geometrically, but also limits your risk on every single 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 you are going to be able to trade
tomorrow, the next week, month and the following years.
Not Being Psychology Tuned
This is one of the most underestimated subjects when it comes to
trading. One of the main principles of financial markets is that the
price of each instrument is based on the perception of each individual
participant "the crowd." In other words the price of each instrument is
determined by the fear, greed, ego and hope of all traders.
Fact: Being aware of all psychological issues that affect the
decisions made by traders will definitely put the odds in your favor.
Lack of Education
Education is the base of knowledge on every discipline. As
lawyers and doctors require several years of college until they get
their degree, Forex traders also require long years of study. It is
better to have someone experienced to guide you through your trading,
since some information could take you in the wrong path.
Fact: The market teaches us invaluable lessons on every single
trade made. The process of education for a Forex trader could take for
ever. That's right, we never stop learning. We should be humble about
the markets and our knowledge; otherwise the market will prove us wrong.
These are some of the most important barriers every trader faces when trying to trade successfully.
Trading successfully the Forex markets is no easy task, it
requires a lot of hard work to do it right, but with the right
education, you will put yourself closer to your trading goals.
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