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Beginners Forex Education Forex Basics

7 Horrible Mistakes You’re Making With Forex Trading

If we are going to be completely honest, we all make mistakes and when it comes to trading, we have made many, and we are sure that you have too. Some of them are not too bad, some of them though, are pretty horrible and have thrown off our trading quite a bit. If you look back, we are sure that there are some mistakes that you have made in the past, especially when just starting out that you are most likely not too proud of. We are going to be looking at some of the horrible mistakes that we have made and that other trades have made during their forex trading careers.

Spending Too Much Time Trading

One that you probably would not expect to see, but spending too much time can be just as bad as spending not enough. The majority of traders have other things in their life too, maybe a job, maybe a daily, anything else that gives you some form of responsibility. What you do not want to do is to use every minute that you have spare, or even to take away from the other things in your life. This can lead to a lot of problems, we have known traders to lose their job or to lose their families just from spending too much time on their trading. Do not let this happen to you, make sure that you divide your time up between the things that are important and don’t let trading take over.

Continuing to Trade a Losing Strategy

A lot of traders have a lot of pride, they like to think that they are correct, while it is good to be proud of what you do, it is not good to let that pride cloud your judgment. If you are trading a strategy that is losing, why would you want to continue doing it? Maybe you believe that it will eventually work, maybe you blame the markets, but one thing is for sure, these traders do not want to admit that maybe their strategy just doesn’t work at the moment. If something is not working, work out why and make changes, do not keep trying to force it to work or trading and waiting, you will only end up losing money, so you need to admit when something isn’t working and then make a change.

Trading Without Stop Losses

This one is common amongst both new traders and experienced ones and it has the same effects on the accounts of the traders and that is that they will eventually blow. Stop losses are one of the first and most simple forms of risk management that you should learn about and certainly use. The stop loss is there to protect your account, it will automatically close the trade when it reaches a certain level, yes it will lose in a negative, but it will be protecting your account. It also allows you to properly implement your risk to reward ratio. Ensure that you are using stop losses with every trade, every single trade, and your account will be a lot safer, without one, a single trade can blow even the largest of accounts.

Trading with More Than You Can Afford

One of the things that you will always be told is that you should never trade with more than you can afford to lose, what this means is that if the money that you are using is needed for something else, like bills, rent, or food, then you should not be using it. As soon as you use this money you are basically saying that you may not be able to pay the rent this month, not a situation that you want to be in. Even worse are the people who are borrowing money, getting a loan just for the purpose of trading it. This is not something that you want to do, do not put yourself into debt just to be able to trade. You should only trade what you can afford to lose, money that won’t affect your life if you lose it. Not only does it help protect your finances and life, but it also helps you to reduce the levels of stress that would come with potentially losing money that you need.

Trading It All

Emotions can have a huge effect on our trading, especially when we come across losses. When we experience those losses, we sometimes want to win it back, we do this by placing larger trades, or more trades that are not in line with our strategy for risk management. This is not something that you want to do and it is known as chasing your losses. You place larger trades in order to try and win the money back, but what happens when that trade also loses? You will end up placing an even larger one, then larger until eventually you cannot afford to make any others and you have pretty much blown your account. Avoid doing this, it is not smart and lots of people have actually gone bankrupt trying it.

Guessing the News

News events can be very lucrative, you can make a lot of money from them if you get things right, especially things like the Non-Farm Payroll announcements. The problem is that if you get it wrong, you can lose a lot of money. What some people try to do is to guess the direction that the news will make the markets move, this is never a good idea. The news can be unpredictable, the markets also do not always move in the direction that the news suggests it should. With news events the markets can jump quite a lot, so even with stop losses in place the markets can actually jump past them and you can end up losing more than you expected. Avoid trading the news unless you really know what it is that you are doing, it is far safer to avoid it than to guess at it.

Trading Without a Plan

This one is more relevant to those that are just starting out in their trading careers. Trading without a plan basically means that you are placing trades without any reason, this is the part of trading that could best be compared to simple gambling. You need to use a plan, otherwise, ask yourself why you are placing the trade that you are. If you cannot answer it properly, with analysis and things like that, or you just simply say because you think it will win, then you should not be placing it. Do not place trades without a plan, at any time in your trading career.

Those are some of the horrible mistakes that you and a lot of other people may be making. They can have a real negative effect on your trading or your life as a whole, try and avoid doing them at all costs. If you are currently doing one and can recognize that, then see what you can do to help yourself get out of doing it, you will see some huge improvements to your trading results and even possibly your personal life too.

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Forex Basics

These Mistakes Will Keep You From Succeeding at Forex

Mistakes happen, we all do them and we make mistakes when we do pretty much anything in life, even things that we have been doing for years and years. So it is obvious that we will also make mistakes when it comes to our trading, that is always going to happen, what is important though is how we earn from them and how we develop after making those mistakes. Some are pretty minor and don’t have a huge effect, some may even benefit us if we are lucky, but some mistakes will hold us back, they will prevent us from being successful and profitable and if we continue to make them, we will consistently lose out and won’t be able to become a successful trader. It is those mistakes that we will be looking at in this article, mistakes that many traders do that can hold their forex trading success back.

Taking Shortcuts

It can be very easy to fall into the trap of taking shortcuts, when we say shortcuts we are referring to the rules and the methods that you use to place trades, your trading plan will have some rules on it, these rules will dictate how and when you place your trades. These can be pretty small shortcuts, like not waiting for additional confirmation, or they can be pretty significant ones like trying to speed up the process by not placing a stop loss with a trade. While they may not seem big, those little things like not placing a stop loss could potentially end up causing some quite considerable losses which will, in turn, put your overall trading results back quite a bit. It is important that you try to avoid these shortcuts, some may work, but when they don’t they can have big effects. Ensure that you stick to your rules and that you do them fully, not doing just half and hoping things are ok, that extra minute that you save is not worth the additional risks involved.

Not Following A Plan

The plan is there for a reason, it is called a plan because it is what you are meant to be following. Yet we see so many people look at their plan and then only follow a few of the things on it. Trading plans should be pretty diverse, they will include the rules for placing trades as well as the risk management plans that are there to help protect our account. Due to this, it is important that you follow them, as soon as you deviate you are placing bad trades and you are reducing the effectiveness and the consistency of your trading. If you have a plan you need to stick to it. The more that you go against it, the more losses and larger effects those losses will have on your account. Stick to your plan at all times.

Increasing Risks

A lot of people don’t seem to stick to their risk management plans, at least not entirely. Your plan will have your risk to reward ratio which will dictate things like your stop loss distance. It will also include things like the trade sizes that you should be using as well as the frequency of your trades. Yet so many go against this, the normal reasons for going against it and increasing things like trade sizes and frequency are a recent loss that they want to win back or overconfidence, things are going very well and so they believe that they can predict the markets. If you ever feel like this, then take a step back, take a break and then come back when these sorts of emotions are not with you. Stick to your risk management plan, you set it up for a reason, it works, so every time you break it you are risking money and potentially your entire account.

Trading Tired

Something that we are all probably guilty of, we love to trade, but sometimes it is better not to and when you are tired, that can be one of those reasons. When we are tired we do not have the same concentration levels, we are far more easily distracted and we are far more likely to make mistakes. Yet we love trading so much or feel that we need to trade that sometimes it doesn’t matter how tired we are, we will still trade. This is where a lot of mistakes will be made, things missed out and potential losses gained. If you’re feeling tired, or that you cannot concentrate fully, then you should try and avoid trading as a whole, including analysing the markets and especially placing any trade.

Being Distracted

Distractions are horrible things when it comes to trading, pretty much anything can be a distraction. When you set up your trading officer room, you should have ensured that a lot of the things that could cause you distractions were removed. Things like a TV, games consoles, things like hats, things that can take your attention away from your trading. Ensure that others know that you are trading and that you do not wish to be disturbed. Distractions can very easily cause you to miss things or to place trades incorrectly, so it is vital that you eliminate as many as you can.

Trading With Emotions

Emotions are wonderful things, they can make us feel amazing but at the same time, they can make us feel pretty rotten. One thing that we want to avoid is trading while our emotions are pretty high. They can cause us to want to do things that go against our trading strategy, things like greed and overconfidence can make us trade large or more often, while things like anxiety and fear can make us not want to trade at all. When we have our emotions high or you can feel something building up then it is important that you take a break, step away, clear your mind and come back when those emotions have died down.

Those are just some of the mistakes that people make when they are trading, some of them may seem pretty small but the consequences that they can have can be pretty big. If you are in any situation, then take a step back and see what you can do to try and rectify things. It’s not the end of the world but what is important is that you are able to recognise them and then do what you can to rectify them.

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Forex Psychology

Top 10 Forex Trading Psychological Mistakes

It is said that the personal psychological challenge constitutes 90% of the struggle to achieve consistent success as a forex trader. Can it be true? Yes and no. Many great traders who have written about their experiences have recognized how their own inner psychological struggles have caused them heavy losses, even when they “knew” they were doing it wrong. There can be no doubt that the psychological factors are of great importance in the game of Forex or when speculating in any market.

Mastering your negotiating psychology isn’t going to offer you money by itself but, if you’re not aware of the tricks your own head is trying to reproduce, you are very likely to be losing even if you are a good trader and have been successful in your trading decisions. There are hundreds of ways a trader can sabotage himself. There is a “physical” aspect to trading.

We want you to find it useful in your journey as a trader to be aware of the various psychological traps that traders usually fall into. Sometimes you have to experience something for yourself to learn from it: nothing teaches us better than direct experience. We want some of these points to give you a new understanding of the trading errors you have already made or warn you beforehand of mistakes you have not yet made. Make the effort not to blame yourself when you make a mistake while operating: get your “revenge” by learning the lesson and not by making the same mistake.

#1 – Not Believing In Your Methods

It is surprising how many people operate in the markets without being convinced that they can make money or at least make sure that they have a good chance to do so. Even if you think you believe in what you’re doing, are you sure you don’t have big doubts under that surface? The answer to this problem is to prove its methodology. For example, if you follow trends, take time to review much historical data. Does it show profitable results most of the time? It’s based on a solid concept, like a reversion to mean or impulse? If the answer to all these questions is yes, you should be sure of what you are doing and not forget that you believe in it.

#2 – Not Having a Plan and Sticking To It

This sounds very obvious. It’s not just about having a plan, it’s about having several plans and leaving some flexibility. For example, if you are doing day trading, you must have a method to decide in each session which currency pair or pairs to trade. But, if the pair that choose goes nowhere, while another pair shoots up, you may want to reconsider your decision rather than just “stick with the plan”, for example, allowing you the option to modify your opinion hourly. It is a “plan”, but a plan may also include some structured flexibility.

#3 – Not Knowing the Difference Between Planning and Living

It’s pretty easy to make a plan that works on paper, but living that plan in real-time can be something completely different. A good example is to make a plan to do hundreds of trades in a year or so and expect your account to suffer a 20% reduction as it suffers a streak of 20 consecutive trades with losses. You can make the review in a day or two and decide if such losses are acceptable. You will probably feel very different when you spend weeks or even months losing real money over and over while your balance shrinks. There is no optimal answer to this dilemma, just keep in mind that spending months of time in an hour or so is not necessarily a good psychological practice for bad negotiating times.

#4 – Being Afraid Of Placing A Position

These are the opposite sides of the same problem. The best way to overcome this is to tell yourself every day that you are willing to place several positions in one day or none at all, and that what you do will depend entirely on the market situation rather than the condition of your wallet or your mood. There will be days without action and days with lots of action. You have to adapt to the circumstances.

#5 – Making “Agreements” with the Market

Tell yourself that, if the price goes up another 10 pips or if it doesn’t go up in the next hour, you will close the position. This is simply your mind subjected to your anxiety. Ignore it, stand firm, and just step out of positions according to your plan.

#6 – Being Too Anxious To Take Profit

You see a benefit on the table and think how nice it would be to take it and stop operating that day, thus missing what could be a more profitable day. This is laziness and self-indulgence and must be controlled. The only reason to take profit must be that you have a real reason to believe that you will probably not go much further in the desired direction. Let the market point it out, not anticipate it.

#7 – Protecting Yourself From Losses

This is really the same as an appetite for profit. You may need to rethink your risk management strategy.

#8 – Letting Positions With Losses Run

There is a simple way to avoid this: always use a strict stop-loss and do not constantly expand it.

#9 – Not Taking Responsibility for Your Trading

It’s very easy to make excuses. If I hadn’t missed the bus/been distracted/in a bad mood then I would have handled the position better and made money instead of losing it. It’s your duty to make sure that that you do not miss the bus or get distracted or be in a bad mood. Once you take responsibility for your trading activity, your mood can improve as you see that there’s a way to make things better. It’s a marathon, not a sprint.

#10 – Endless Search of the “Holy Grail”

You test and design a strategy that offers an average of 20% profit per year. But wait! Try something else to earn even more, say 25%. Is there anything better out there? Maybe, but this process of searching and testing can take a long time. Consider this: If you spend 6 months testing instead of operating in a committed way to find a way to earn 25% instead of 20%, you will simply lose 10% and it will take you another year to make up for it. Keep searching by all means, but don’t let that affect your trading. Even if you have a pretty solid methodology, it doesn’t have to be perfect!

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Beginners Forex Education Forex Basics

Top 10 Errors Made By Forex Newbies

In this article, we present 10 errors of the beginner trader that are repeated more frequently. These mistakes are actually made by any trader, from beginners to veterans. It doesn’t matter how long you have on the market; from time to time you will experience lapses of indiscipline, either because of extreme market conditions or because of emotional factors. It is vital to recognize and understand these situations in order to be successful in trading.

1. Cutting Profits, Letting Losses Grow

Usually, the most repetitive error when investing in currencies is to hold lost positions too long and close winning positions early (usually out of fear). Even with a larger record of winning positions, the losers, though less, will represent a larger amount of money.

The best thing we can do to limit losses is to follow a business plan that considers the risks and always use a stop-loss. Normally no one will be right all the time. It is best to accept that having some losses is part of the day-to-day, the more time it will take to refocus and get winning operations.

2. Operating without a Plan

Opening a position without having a concrete action plan is reckless, and the market will surely take our money. If the price moves against us and you don’t have a plan, you won’t know for sure when to cut the losses. If the price moves in our favor, neither will know when to collect the winnings. Making these decisions in the heat of open positions is a good invitation to disaster. Trading with a plan is perhaps the most important step a Forex trader can take, as it tries to largely eliminate the emotional part when it comes to making trading decisions.

3. Operating without a Stop-Loss

Operating without a stop-loss is also a recipe for disaster. That’s how a small, manageable loss can end up blowing up an entire account. Using a stop-loss is a vital part of a well-crafted plan that has specific and realistic expectations, based on prior analysis and research. Stop-loss indicates when a given strategy is invalidated.

4. Move a Stop-Loss

Moving the stop-loss to avoid being taken out of position is almost the same as investing without a stop-loss at all. It indicates a lack of vital discipline, which will unequivocally result in losses in most cases.

The exception to the rule that allows you to move a stop-loss, is when it is done in the winning direction, to consolidate profits that are being recorded in the position. Never move the stop-loss in the losing direction.

5. About-Invest

There are two forms of over-investment.

– Investing too often in the market: Investing too often suggests that something is always happening in the market and that you always know what is happening. If you have open positions constantly, It is also usually exposed to financial market risks. It is much better to focus on looking for good and strong opportunities, where the risk is minimal, and where a well-developed plan and strategy can be implemented.

– Holding many open positions simultaneously: Having too many open positions at once is an indication that you probably don’t have a good business plan and many of them are opening up instinctively without control. Many open positions also affect the margin available, making it more difficult to maneuver in difficult market situations.

6. Over-Leverage

Over-leverage refers to holding very large positions with respect to the margin available. Even a small market movement can be catastrophic in a very large position for the margin available. This common error is made more tempting by the generous levels of leverage offered by online brokers. If a broker offers leverage of 1:100, 1:200 or even 1:500, this does not mean that they should be used. Do not base your positions on the maximum leverage available. Positions must be based on factors specific to the operation, such as proximity to specific technical levels or confidence in any specific signal to open a position.

7. Not Adapting to Changing Market Conditions

Market conditions are always changing, which means that the strategies to be used must be flexible. The current market situation should always be analysed using technical analysis to determine whether it is fluctuating or trending. Likewise, the use of technical indicators must be flexible. No indicator works well all the time. Different indicators and strategies should be used depending on market conditions. Some indicators work well in fluctuating markets, while others work better in markets with more pronounced trends.

8. Do Not Be Aware of Important News and Events

Even for traders who rely exclusively on Technical Analysis for their operations, it is essential to be aware of the main news and events of the market. If at some point certain indicators are indicating the existence of a very good opportunity to open a transaction, but in half an hour a piece of important news that can move the market in a significant way. It would be unwise and very dangerous to open that operation. These types of situations can occur if you are not aware of events and news. Always keep the economic calendar at hand and identify those events of major importance that can affect your open positions.

9. Investing in the Defensive

No trader wins all the time. Some of the best traders even lose more times than they earn. But when they lose, they lose little. After a series of losses, it is better to wait a while for the market situation to stabilize and refocus on new opportunities. One should avoid falling into the mistake of investing in the defensive and try to recover or avenge the losses.

10. Having Unrealistic Expectations

No one is going to retire with the result of a single operation. The key is to make profits as experience is gained. You have to be flexible and manage to adapt to market conditions. It is a bad idea to have in the beginning goals about how much money you will earn. With expectations about specific quantities, and being in a position where those expectations have not been met, it is very common to fall into the temptation of opening larger operations to achieve the goal. Finally, the result is usually a greater loss.

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Forex Basics

Warning: These Mistakes Will Completely Destroy Your Forex Profits!

Let’s imagine that we have been trading for a while for a few months or a year, we are profitable, we are on a high and then all of a sudden, things go wrong, we lose some of if not all of our profits, but why? Why have we made these losses? There are a number of very common mistakes that people make which can lead to them losing their profits, or even their accounts. These mistakes can be easily avoidable, some through your own actions and others by changing something that you use. We are going to be looking at some of the mistakes that people make which can eat into their profits and also what you can do to try and avoid making those mistakes yourself.

Forex Broker Charges

From the very start of your trading career you will be using a forex broker, these brokers, unfortunately, have charges. Each broker will have completely different charges and they come in the form of three different things. There is the spread which is the gap between the buy and sell price, some brokers will artificially increase this gap as their way of taking payments for each trade, others trade straight up commissions. Every trade that you place will have a charge attached to it that you must pay. There are then swap charges, these are charges that you pay to your broker for holding trades overnight, they vary with the interest rates of the markets. All three of these charges have the opportunity to eat into your profits, when deciding which broker you wish to use you will need to take this into consideration, if you are using a scalping strategy then having a broker with high charges will basically use up all of your profits making it pointless. So ensure that you chose the right broker that won’t eat into your profits from the very start.

Swap Charges

We briefly mentioned swap charges above, but they can have a larger effect than you may think. We have seen trades being held over a period of a week or two which have had swaps so large that even though the trade was in the blue, it was in fact trading at a loss, and the longer it was held the larger that loss became. You need to keep track of your swap charges, especially if you have a lot of trades open at the same time, if you fail to do this, they can very quickly mount up and overwhelm your profits, even causing you to take a loss when the trade is in fact winning. Know your swaps and understand what swaps are going to be applied to your trade, it may be worth taking a small loss in order to protect yourself from larger swap charges.

Forgetting Stop Losses

One of the major parts of your risk management plans will be your stop losses, they are designed to protect your account and should be there with every single trade that you make. However, it can sometimes be easily missed, especially if you are very quickly trying to put on a trade at the current price due to volatility, some strategies will have you placing the trades and then coming back to them to combat the losses, but again, this can mean that it is easily forgotten. We need to ensure that we are placing the top losses with eerie trade and that we are putting them on as we open the trade. If you feel what you do not have time to put them on, then put them on as soon as it is open, if not then avoid trading in what manner completely, you need to take your time to ensure that they are on so that you do not take larger losses which could take away quite a lot of the profit that you have previously made.

Not Diversifying

Think about how many currency pairs or assets you currently trade? If it is just one or two then there may be an issue. It is true that when you start out that you should only concentrate on one pair until you understand it, but once you do it is important that you start to branch out. Having trades on more than one pair, more than two, or even more than three will help to protect your account, it ensures that you are not putting all of your money on a trading pair. This means that even if one goes negative, the others will be there to help maintain your current profit levels and to help protect your profits and account. It is important to branch out, but remember not to do it too quickly and overwhelm yourself.

Changing Your Strategy

If your strategy is bringing you profits, why would you change it? The thing is, that many people do for some reason. We cannot explain it, but if you are doing something and it is working, do not change it, the old saying, “If it ain’t broke, don’t fix it” is very relevant here. Yet we see people do it all the time, changing things because they think that it will make them that little bit extra. That extra would be nice, but why risk losing something that you already have in order to get it? Stick to the working strategy. It has brought you profits up to this point, so there is no reason why it will not bring you more afterward too.

Letting Emotions Take Over

Emotions are wonderful things, they make us feel and they allow us to do things that we otherwise would never dream of doing. Unfortunately, when it comes to forex, those emotions are not exactly the most helpful thing. Things like greed, overconfidence, doubt, and pretty much anything else can have negative effects on our trading. Things like greed and overconfidence can cause us to trade outside of our plan, to place additional trades, and to also place larger trades than we are used to which is dangerous and is a sure-fire way to make some losses. Things like doubt can make it so we simply do not want to place any trades, to avoid putting them on makes trading completely pointless. If we aren’t going to trade, why are we sitting here with our money in an account? It can be hard to control the emotions, but if you feel them taking over, take a break, take a step back and relax away from trading, this way you can come back with a clear mind and then continue to trade to the plan.

So those are some of the things that people do that ends up eating into their profits. There are of course a number of other things that people do, some are obvious, some are not so obvious, but what is certain for all is that we need to stick to our plans and not change things. Understand what and why we are trading and then simply let the profits grow without any added interference that could potentially cause us to lose some of those hard-earned bucks.

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Beginners Forex Education Forex Basics

The Most Common Error of All Forex Traders

The question I’m usually asked is, “what’s the biggest mistake that Forex traders make?” The question is more complex than it seems because mistakes are usually accompanied. The usual culprits are lack of capitalization, poor analysis, poor risk management, or even a lack of a robust trading strategy. Even though all these mistakes are relevant I think the answer can be summed up in one thing: a complete lack of patience.

Patience in Trading

Patience matters more than anything in trading. I bet a lot of you were going to say that the number one error in Forex trading is an inappropriate position size. That is the de facto standard response that most analysts and forex experts give. We take it for granted that this is a crucial problem for most retailers, but even that can be reduced to a complete lack of patience. After all, think about what causes an inappropriate position size: it is the mentality of getting rich fast. That is simply a lack of patience in essence.

Lack of a Trading System

If you do not have a trading system or at least one that is reliable, it is probably due to a lack of patience as well. After all, it has not taken the time to have a system in order to position its trade. You haven’t spent time learning technical analysis or anything else on which to base your trade. Even if you did, have you tried it? , a true trading system is the one that has been tested and must have the ability to understand what is the expectation of it. If you have not done all this, you are simply trying to run before you have the ability to walk. Lack of patience will cost you money.

Breaking Their Rules

Let’s just say he’s done the right thing and has a decent trading system that is expected to make money in the long run. However, you sit at your terminal in the morning and recognize that there are many obstacles to making some strong positioning. Unfortunately, many of you will continue and trade anyway, because of a lack of patience. This will make you make bad decisions and certainly lose money as the market will somehow have no direction or at least will not respond to your strength. Remember, sometimes we get paid to do nothing and wait for an appropriate time.

Trading for Revenge

Trading for revenge is short on patience personified as well. Why? Because you got a loss and now you’re trying to get the money back frantically. Unfortunately, we’ve all been in that situation. You took a position that you thought was valid but some random event that affected the market got you out of it. It’s very complicated not to take those moments personally and certainly, the first thing you think about is getting your money back. However, doing a little trading for revenge makes you more likely to lose more money than you originally lost. By not waiting for the next appropriate moment, you are demonstrating a lack of patience, which is the worst thing that can happen when it comes to Forex trading. Keep in mind, when you lose money, that’s it. If you do continuously, you won’t have enough capital to keep progressing.

Not to Investigate

You have to keep in mind that the fundamentals of a trade never really change, there are many details you will need to pay attention to. For example, I have been trading in futures markets, shaping markets. This is something I have done before, because I come from the world of Forex, therefore the true volume of the market is something that is elusive. Although you may be able to earn money on the futures market without shaping the market, I think it helps a little. I am right now investigating it from the point of view of someone who is doing a test, showing that even after many years of trading, there is always something new to learn. Indeed this is one of the great things about this initiative: it never stops teaching you, if you feel like learning. If you don’t have them, trading isn’t for you.

Not Consulting with Yourself

A big mistake I used to make was not consulting myself. What I mean by this is paying attention to my state of mind while trading. Frankly, some days are just not good days for trading. If you have money and are not comfortable or just too agitated you will need to stay away from the markets because they will try to provoke you to the fullest. There is nothing worse than having some external problem causing you anxiety or a feeling of discomfort while you are trading making you lose money many days in a small amount of time. I’ve been there, and it’s one of the worst things you can do. Why do you do this? Because you’re not being patient. You don’t understand there’s always a tomorrow, assuming you keep your trading capital intact.

The Main Conclusion Is…

I know this sounds extraordinarily cliché, but trading is like a marathon and not a short race. In fact, I would say that one of the most valuable parts of trading is how much of the lessons will influence your daily life outside trading if you allow it. Patience is certainly one of the main rules that the market teaches me every day. Patience is easily much more relevant than any other problem the trader faces. After all, if you stand aside and just look at things in a calm and rational way you could normally find the solution. However, in the heat of a trading session is not always the easiest thing to do.

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Beginners Forex Education Forex Basics

As a Forex Trader, Get Used To Being Wrong

Trading is a game of probabilities, ultimately you will either get something right or you will get something wrong, when we look for trading opportunities, we are actually looking for a number of different probabilities, each thing that affects a trade will add a probability towards the markets going up or down. We correlate these into a buy or sell, the one with the higher probability we go for. Sounds simple, and it is, the problem comes from the fact that the markets don’t always do what they are supposed to do and that you cannot take every single probability into account so you may miss one, but that one is a major one that would have gone against you.

So considering the fact that we look at so many different probabilities you would expect that we would get the majority of our trades right, but it is actually the complete opposite, you should actually be planning to get the majority of them wrong, especially when you are first starting out in your trading career. There is a reason why the majority of people fail and lose the money that they put in. However, one of the best defences to losses is to expect them in the first place, we are going to take a look at why it is so important to recognise that you will make losses, lots of them, and why you should be prepared for them.

The question of why we need to be able to prepare ourselves for losses is so simple to gain an understanding that you will have losses and a lot of them. People see the big numbers that others have gotten or have said that they have gotten (don’t believe everything you see on the internet) and so come into the trading game with the expectation that they will do the same with very little issue along the way. There needs to be an understanding that even the most consistent and most profitable traders will have losses, or multiple in a row, in fact, people can be profitable even with a very low win rate. So if even the best traders in the world are making losses, then you should certainly expect to make a few too.

Just because you have made some losses does not mean that you are doing anything wrong or that you are bad at trading, it does not mean that your analysis was bad or wrong, it simply means that the markets moved against all the positive probabilities that you had found, and this happens, a lot. Sometimes it can be something completely out of the blue, a natural disaster somewhere, or a certain president putting up a new twitter post. These things are out of your control, they are not available to be analysed and simply happen, throwing the markets out of synch and potentially causing your stop losses to be hit. You cannot really blame anything you have done for that.

You need to be in the state of mind where you are able to accept when you are wrong, you need to be able to see what you have done wrong or whether or not it was out of your control, as long as you are able to accept it, then you will be putting yourself in a good position for getting past it and for changing your own ideas to be slightly more successful. Your losing trades can give you an idea of certain assets or trades to avoid in the future, it can tell you if you are risking too much and they can ultimately help you to become a better trader.

So what we need to do next is to recognise that trading is not all about the ideas or the overall strategy that will make or break your account, it is your own personal skills as a trader. Of course, it will take those things mentioned above into account, but it will be looking at you as a whole and your overall understanding of what you are doing and trading. If you have confidence in what you are doing, confidence in the risk management that you have pt in place, you will be far more open to being wrong and to having losses, as you understand that those losses are a part of trading and that you are able to get through a number of losses without too much issue.

If you are still not used to the losses, then try keeping a trading journal (you should be doing this anyway) in order to document those trades that have lost, this will then give you a good insight into why it went wrong which can allow you to alter things in the future to help minimise your future losses.

There are a few things that you can think about to help reduce losses and to enable you to better accept those that you have. Consider how long you hold onto trades before they hit your targets, are you holding them too long or for not long enough? Consider what level of losses will be enough for you to consider altering your strategy or your own biases within the markets. Remember, that your job as a trader is not there to be right every single time, you are there to be profitable, while they do go hand in hand, you do not need to be right in order to be profitable We mentioned before, that many profitable traders have a very low win percentage, but because the rest of their strategy is on point, they can still come out with some money.

If you are not able to accept losses when they occur, it can lead to a number of different issues, it can put you into a slump or create emotions that could jeopardise your trading. If you feel that you have lost too much then it can make you want to get it back by increasing your risk, which is not a good thing at all. Make sure that you learn how to accept those losses so you do not fall into a slump which could potentially put your account in danger.

So those are our views on accepting losses, you will be experiencing a lot of them as you trade. It is paramount that you are able to accept those losses and that you are able to get through them. The earlier that you are able to do that, the earlier you can get through them, and the quicker you can become a profitable and successful trader.