Forex trading is a hot market today; many people are jumping on the bandwagon. However, it’s also true that many fail. Why? Many who trade don’t take the time to learn the skills they need to so that they can actually achieve success. If they did, many more would be successful in Forex.
Here, I’ll discuss things that can get in your way of Forex trading success. I’ll also discuss what can help make you more successful in Forex.
First, let’s talk about the obstacles to success. There are two major psychological ones in Forex trading: fear and greed. If you operate from greed or fear, you will continually fail in Forex trading.
With Forex trading, you are sometimes going to have losses; everyone does. But if you play your cards right and operate with prudence and careful calculation and not from fear or greed, you’re much more likely to have more gains than losses, which should give you an overall profit in Forex trading.
Let’s talk a little bit about what can get in your way of success first. There are two major stumbling blocks, psychologically, to success as a Forex trader. They are fear and greed. If you operate from a base of greed or fear, you’re going to fail continually in the Forex market.
When you trade in Forex, be aware that you’ll lose sometimes, as all do. However, if you take care and do your trades with careful calculation and caution, you’re likely going to have more wins than not. This should give you an overall profit when you trade in Forex. However, if you let fear and greed run you and your trades, the opposite will also be the result. You’re going to lose more than you win.
First, learn everything you can about Forex trading. Research Forex brokerage firms and choose one with a good reputation. Most good Forex firms have something called “demo trading” or something similar. When you demo trade, you trade with “fake” currency until you’ve learned all you need to know about Forex trading. Then and only then should you trade with real money.
Simply put, you should NEVER start trading until you’ve had a least a month or two of solid experience with demo trades. Learn everything you can about the different kinds of orders you can place, how to place them, when to place them, et cetera. Learn how to properly analyze charts and data so that you know when you should get in, and when you should get out.
Second, get as much practice as you can. When you think you’ve gotten enough, practice some more. DON’T start trading with real money until you know what you’re doing. Most learn how to read trends and charts by doing two different types of analysis, technical and fundamental.
Some people ascribe to one school or the other specifically, but most truly experienced traders use both methods to analyze data and arrive at their own conclusions as to when they should buy, hold, or sell a particular currency on a given trade. Practice until you are very, very comfortable doing trades and your mock “successes” far exceed your “failures.”
Third, when you think you’re ready to start trading with real money, start small. Many Forex traders will let you trade with amounts as small as $10 or so. Yes, at that level, your gains will be small, but so will your losses.
Fourth, when you begin trading with larger amounts of money, don’t trade with money you can’t afford to lose. Don’t trade with money meant for necessities such as your mortgage. You should only trade with money you can spare.
Fifth and last, realize that as long as you are careful and prudent, you can make money through Forex trading. However, you should also know that you’re never going to win every trade. You’re going to lose some.
That said, if you practice and learn your way around Forex trading so that you develop your own system that works, you’ll likely be successful. Follow your system and don’t let greed or fear drive you. This should make you profitable over the long-term.
In conclusion, remember that Forex trading is not a guaranteed income maker. You are taking a chance with your money, for the express purpose of actually making money; this can be risky, just like other types of monetary trading.
There are people who make truly decent money from this, but those who are successful are prudent and careful. They study the market before they make a move. If you do this, too, and you only risk “extra” money, you should eventually be successful at Forex trading, like so many others.