When it comes to forex trading, every single trade will have its own individual experiences, however, there will also be a lot of things that are similar, simply due to the nature of the markets. Some of those similarities unfortunately will be problems, problems that the majority of traders will experience. Some may see them as problems, others though may not actually class them as a problem, even though they experience them. We are going to be looking at some of the problems that every trader will experience and the different things that you can do to try and get past them.
Too Much Risk
When you are doing anything with your money, there will be risks involved, risks that could result in you potentially losing any money that you have put in, this is certainly the case when it comes to trading forex and this is a problem for many people. Not necessarily the money that you are putting in, but the emotions and stress that the potential losses can cause. Some People are simply not able to handle risk as well as other people, this is known as their risk tolerance. If you have low levels of risk tolerance then you will find it hard when trading, each and every trade that you put on is increasing the risks to your money and each trade can result in a loss. Some people will struggle with this and so they will end up closing trades early or imply not placing them.
What we need to ensure is that we have a proper risk management plan in place, one that will allow us to reduce the risks for each trade and so that we can see exactly what is being risked with each trade. Things like a risk to reward ratio will allow us to plan the maximum amount that we can lose with each trade through the use of stop losses. These will automatically close the trade when it hits a certain point, this way we can reduce and manage the losses that we are going to take. It keeps our account safe and knowing what the potential loss is before we even place the trade can help give people with lower risk tolerance a lot more confidence in their trade and can help to take some of those worries away. So ensure that you have a proper risk management plan in place to help reduce the issue of trading being a risky endeavor.
It Takes Too Much Time
Another thing that a lot of traders coming into the industry do not fully understand is the amount of time that it takes to learn and to actually begin trading. The initial periods can take a lot of your free time, you need to learn the basics, you need to create a trading strategy, you need a risk management plan for that strategy, and more. This can take a lot of time, more than most people expect as some come into it thinking they will set up an account and then trade, you can of course do that but it will ultimately result in loss.
So yes it does take a long time to get ready, however, it doesn’t always stay like that. Once the initial learning has been completed and you have a strategy ready. Depending on the strategy that you have created, they take up different amounts of time when we look at actually placing trades. If you are the sort of person that does not have a lot of free time, then you can create a strategy that only requires you to place trades once a week, this way you do not need to spend a lot of time placing trades. So yes the initial learning and starting out, but once you have passed that stage, it does not actually take too much time to trade itself. Of course, you will be constantly learning more, but that can be done in bitesize chunks.
It’s Hard to Track
Let’s be honest, when you are placing a lot of trades, not many of us think that we have the time to track everything, to write down everything that we are doing and why. One of the things that are thrown at us when we first start trading is the fact that we are supposed to be keeping a trading journal. A journal where we write down everything that we’re doing, the trades, the results, the reasoning behind it. We just don’t have time to do it all or to even keep a track of the trades we have running.
The good news is that it is a lot quicker than you might think, yes it can be a pretty slow process when you first start out, but it speeds up. It now only takes us a few seconds to write down what we are doing and why, our trading platform also shows us most of the information that we need such as the times of trades, the profit and loss, and so forth. It seems like it will take a long time to build the more that you do it, the quicker it becomes. At the start, it may be a hassle, but it really does not take a lot of time at all once you get used to doing it.
You Need A Lot of Money
When it comes to things like investing, you often hear the phrase “You need money to make money”, while to some extent that is true, if you want to make a lot, then you need a larger balance, but you certainly do not need a lot when you are first getting started. In fact, many brokers allow you to join from as little as $10, making it pretty accessible to most people in the world. Those that were once priced out of the markets can now very easily get involved. It will be hard to make much with such a small balance, for that you will need more, but it just shows that you do not need a lot in order to get started and to actually make anything.
Those are just some of the problems that a lot of people run into when they trade forex. There are others, plus there will be problems that are very individual, that only you may experience. What is important to remember, is that things that look difficult or look like they may stop you in your tracks now, may not actually be as big of an issue as you may think and there will always be ways to get around and to solve the problems that you come across.