Guide For Starters In Forex Race - Part 2 - Three Ways To Avoid Failure
Guide For Starters In Forex Race - Part 2 - Three Ways To Avoid Failure
By Cas Jones
Is a well-known fact that most of the beginners fail in their forex trading and lose their money completely during the first year of forex trading. After that period 9 of 10 novices give up and leave foreign exchange market as a traders forever. So if you don't want to be among them (and I hope you don't) it'll be useful for you to learn on their mistakes.
So what are that pitfalls and on the trader's way? I'll cover 3 of them in this article.
First mistake is: beginners often try to oversmart the market. As you might know already, forex is huge - about 3 trillion dollars a day is exchanged on it! And there are a lot of factors that affect currency rates movements and there isn't really one "holy grail" indicator - be it technical or fundamental - that's going to predict every market top and bottom. Also there isn't any deposit size that's going to affect it even a little bit - remember it.
Also you need to see the trend. Don't trade against it! "Trend is your friend" - keep that in mind. So if you do day trading, it's weekly or 2-3 week trend. If you trade medium-term, it's monthly and/or quarterly trend. If you trade long term, it's yearly trend. You got the idea. Just identify it and then stick with it.
Second: many forex starters try to be profitable every day. But truth is - there are a lot of "bad days" on forex for every trading system be it intra-day, medium-term or long-term trading. There are even bad months for every strategy. That's normal. That's part and parcel of trading, and I mean not only forex trading but stocks, futures, spreads trading etc.
So don't try to set a goal like "$100 a day at any price". It's not going to work. You'll just enter the bad market again and again, lose all your previous profits and then - your whole deposit. And don't let that bad day, week or month stop you. Don't give up, just wait for a good day, week or month and learn to see it when it comes and use it profitably.
Third stumbling-block of most traders is... their emotions. If you let your greed or fear come into play - you're guaranteed loser for a long-term. Discipline is one of the corner-stones of forex trading. No matter what happens - stick with your trading strategy. Do not change it every day, set a period of time (typically 2-3 months) and for that period of time do not touch it at all! Remember: changing your strategy every day or week equals having no strategy at all. Period.
So develop your initial trading strategy, set of rules and then adhere to it no matter what. That's vital for your trading, your success and your money.
And also, if you're a typical forex starter with no trading experience at all or little experience - don't make huge deposits. Just open a mini-forex account and try it for the first 2-3 months. If you're profitable on it, then move on.
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