Tag: Forex Guidance

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Forex Basics

A Lesson from Bill Lipschutz: Professional Forex Trader

If you Google “top forex traders” or anything close to the phrase, Bill Lipschutz is bound to be on the list. This professional trader was born in Farmingdale, New York, and began his trading career while attending Cornell University. He earned a bachelor’s degree in Fine Arts while simultaneously enrolled in business classes and also […]

If you Google “top forex traders” or anything close to the phrase, Bill Lipschutz is bound to be on the list. This professional trader was born in Farmingdale, New York, and began his trading career while attending Cornell University. He earned a bachelor’s degree in Fine Arts while simultaneously enrolled in business classes and also […]

If you Google “top forex traders” or anything close to the phrase, Bill Lipschutz is bound to be on the list. This professional trader was born in Farmingdale, New York, and began his trading career while attending Cornell University. He earned a bachelor’s degree in Fine Arts while simultaneously enrolled in business classes and also walked away with an MBA in finance back in 1982. Bill’s strong background education undoubtedly contributed to his success with trading forex. Lipschutz is one of many professional traders that can serve to inspire us all; however, this big-league trader learned a very important lesson early on in his career. 

Everything began when Bill inherited $12,000 worth of stock after his grandmother died. It’s true that many others might not be lucky enough to inherit a large sum of money, but it is still possible to follow in this traders footsteps by starting small, saving up, or waiting until you receive a larger sum of money from taxes or other events so don’t feel discouraged by his large start-up fund. Remember that you can open a trading account with as little as $5. 

Eventually, Lipschutz managed to turn his inheritance into $250,000 after spending countless hours researching the stock market in his free time. While we’d hope for a happy ending, things didn’t go so well from there. Bill lost his entire portfolio balance on a single bad decision when the market turned on him. A failure to use appropriate risk-management precautions contributed to this large loss when it could have been reduced to a less devastating blow. After countless hours working to build his investment, everything was gone. This is the point where many traders would give up, closeout their accounts, and turn away from trading for good. 

Fortunately, Bill Lipschutz only became more interested in trading after learning this huge lesson from his early mistake. He went on the work for the newly formed Foreign Exchange department through Salomon Brothers with a plan to learn about currency trading. In 1995, he formed his own company named Hathersage Capital Management with some of his previous classmates. Today, he is regarded as one of the top 5 forex traders with an unknown net worth, although he was once making $300 million per year. 

In a nutshell, this story is quite inspiring with a lesson behind it. A college-educated person receives an inheritance, decides to invest it into the stock market, and increases his investment by more than $238,000. Then, one bad decision wiped out everything in a move that would have caused most to give up on trading for good. Instead of walking away, Bill Lipschutz became more inspired, continued investing, went on to make $300 million per year for the company he was working on, and later went on to create his very own investment company. We can learn the following lessons from this millionaire’s success story:

  • Don’t give up on forex trading, even if you make a bad trade and lose a significant amount of money! Even if you’re feeling frustrated, you should try to learn from your mistakes and continue to search for inspiration. Perhaps a loss is a sign that you simply didn’t do something right, or you might need to take a break and focus on becoming more educated. Either way, this doesn’t have to be a career-ending mistake. 
  • Know that Bill Lipschutz lost his entire portfolio because he did not use appropriate risk-management precautions. This is the difference between blowing $250,000 in one trade or only losing about $2,500 for a balance of this magnitude. You typically want to risk about 1% on each trade, so about $1 would be lost per $100 for traders that have smaller balances. 

Bill Lipschutz teaches us a good example of how determination can pay off when it comes to trading forex. Even if you get off to a rough start, it doesn’t mean that you can’t be one of the best traders out there someday. Learning this valuable lesson in risk-management and motivation should be an inspiration to us all, so remember to think of Bill Lipschutz anytime things don’t go in your favor.

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Beginners Forex Education Forex Basics

How to Open a Trading Account with Only $5

If you’ve ever compared forex brokers, you might have noticed that some companies require a large amount of money to open a trading account. Many beginners just can’t meet insanely high deposit minimums, or if they can, they would prefer to invest a smaller amount at first before jumping in headfirst. So, are you wondering […]

If you’ve ever compared forex brokers, you might have noticed that some companies require a large amount of money to open a trading account. Many beginners just can’t meet insanely high deposit minimums, or if they can, they would prefer to invest a smaller amount at first before jumping in headfirst. So, are you wondering […]

If you’ve ever compared forex brokers, you might have noticed that some companies require a large amount of money to open a trading account. Many beginners just can’t meet insanely high deposit minimums, or if they can, they would prefer to invest a smaller amount at first before jumping in headfirst. So, are you wondering if it is possible to open a trading account with only $5? The short answer is yes – but there are some important things you’ll need to know. 

First, you’ll need to find a broker that offers $0 minimum entry deposits. Some brokers might offer several account types, with one option that doesn’t require a minimum deposit. Others might offer one standard account without a deposit requirement. 

  • If the broker offers multiple account types, then the account with the $0 deposit requirement is often an entry-level account, such as a Micro, Mini, or Cent account (but not always)
  • If the broker only offers one standard account with no deposit requirement, this can be a good option that will give you the same perks as those that can afford to make larger deposits

As you can see, there are a lot of different types of brokers out there with different account setups. Each broker offers its own account type(s) and requires a specific deposit minimum for those accounts. You’re looking for options that don’t require a minimum or that set the minimum at only $5.

There are some other things you’ll need to know before choosing a broker and making a deposit. Here are some tips that can help you choose the best broker:

  • Some brokers charge very high fees on their entry-level accounts. Even though you don’t have a huge amount to start with, you should still have access to average conditions. Don’t make the mistake of thinking that better options aren’t out there. Always compare options.
  • You should deposit more if you can. While $5 is enough to get started, it won’t go very far. Maybe you want to try making that first trade, test out funding options, or feel the accomplishment of making a real investment into your future. This is all fine, just know that you’ll need to deposit more in the near future. 
  • Check for limitations on your chosen account type, as some brokers set a restrictive maximum trade size on certain entry-level accounts. You’ll want to make sure that you can deal with any restrictions. 
  • Look for a broker that offers some type of welcome or deposit bonus to get more out of your initial investment. Make sure that your small investment will also qualify for any such promotion as some brokers require the deposit to reach a certain minimum to become eligible. 

The Bottom Line

It is entirely possible to open a trading account with average or slightly better than average conditions with a $5 deposit. Eventually, you’ll need to invest more, but there’s no shame in starting small and working your way up. Know that every broker out there doesn’t offer an account with a $5 funding minimum, but there are many recognizable options that do. You’ll also want to make sure you choose the best broker possible without paying unreasonable fees and keep our other tips in mind.

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Beginners Forex Education Forex Basics

Our Top 10 Reasons to Trade Forex Today

You might have doubts about becoming a forex trader, after all, thoughts of losing money, not having the time, and other dilemmas can make trading seem daunting to those that haven’t tried it before. You also might be thinking that the whole thing seems too good to be true after viewing flashy videos that show […]

You might have doubts about becoming a forex trader, after all, thoughts of losing money, not having the time, and other dilemmas can make trading seem daunting to those that haven’t tried it before. You also might be thinking that the whole thing seems too good to be true after viewing flashy videos that show […]

You might have doubts about becoming a forex trader, after all, thoughts of losing money, not having the time, and other dilemmas can make trading seem daunting to those that haven’t tried it before. You also might be thinking that the whole thing seems too good to be true after viewing flashy videos that show the luxurious side of trading. Still, there are a lot of reasons why you should open a trading account as well! Some might be more obvious than others, while you might not have considered some of the following benefits:

Working from Home: Having the option to work from home is one of the biggest benefits of becoming a full-time trader. You no longer have to set an alarm, get dressed, commute to work, deal with scheduled lunchtimes and breaks, and so on.

Work from Anywhere: Forex traders also have the ability to work from anywhere through their phone or laptop with an internet connection. You could log into your trading account while at lunch, doing errands, or even while you’re on vacation. This virtually eliminates the need to plan trips and outings around your work schedule.

You can start with a Small Investment: There’s no need to invest hundreds or thousands of dollars into your trading account if you don’t want to. Instead, you could start with a deposit of around $10 – $100.

No Need to Pay Taxes: Your forex earnings won’t be taxed like those earned on a regular paycheck, which means more of your money winds up in your pocket.

You Get to be Your Own Boss: A lot of people dream about quitting their job, especially if their boss is a nightmare. If you become a forex trader, you no longer have to take orders from anyone. If you sleep in, decide to take a day off, want a long lunch – there isn’t anyone to answer to but yourself.

Flexible Work Hours: Different trading styles support different amounts of time spent glued to the computer screen, so you could always choose a style that doesn’t require constant attention if you’d prefer to have more time off. Even if you trade often, you can get a late start or stop early on some days when you need to. Another option is to purchase a forex robot that will automatically trade for you.

You’ll Make More Money: This one isn’t guaranteed; however, it is likely that you’ll make money if you have a good trading strategy and you know what you’re doing.  There’s no need for us to explain why having more money in your pocket is a plus!

Low Transaction Costs: You do have to pay some fees to your broker, however, fees for forex trading are relatively low.

Leverage: Forex trading offers traders the ability to use leverage, which is essentially borrowed capital from your broker that increases your buying power. 

It Doesn’t Take Much to Start: Some may assume that it’s difficult to get into trading. On the contrary, it doesn’t take much. All you need is a device with an internet connection, like a laptop or smartphone, a deposit of around $10 or so, and a trading account, which can be opened easily as long as you are at least 18 years old. With such easy barriers for entry, everyone could try out forex trading if they wanted to.

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Forex Psychology

Self-Improvement Steps for the Fearful Forex Trader

Forex traders are no stranger to the rollercoaster ride of emotions that come along with trading, as many have experienced excitement, greed, anxiety, anger, and even fear at some point in their careers. Today, we will focus on fear and how it can affect your trading decisions, along with some ways to cope with it.  […]

Forex traders are no stranger to the rollercoaster ride of emotions that come along with trading, as many have experienced excitement, greed, anxiety, anger, and even fear at some point in their careers. Today, we will focus on fear and how it can affect your trading decisions, along with some ways to cope with it.  […]

Forex traders are no stranger to the rollercoaster ride of emotions that come along with trading, as many have experienced excitement, greed, anxiety, anger, and even fear at some point in their careers. Today, we will focus on fear and how it can affect your trading decisions, along with some ways to cope with it. 

While trading, fear can come from the possibility of losing money, as you never know for sure if your trade is going to win. Some people feel this way at all times and are very careful about how much they risk, while others might only struggle with feeling fearful after taking one large loss or multiple small losses in a row. At this point, the trader is more likely to think of how much money that they have just lost and might even feel as though they are having bad luck. The fear then leads the trader to close their position too early, even though it was a valid trade that could have made more money. After a few hours, the price shoots up and the trader is left feeling angry with themselves for closing out the trade when they could have made more money. Sound familiar? Many of us have been there before.

So how do you deal with feelings of fear while trading and avoid closing out trades too early? Try following these steps:

Step #1: Identify Your Fear

First, you need to admit to yourself if you’re feeling uneasy and figure out why. Are you simply afraid to lose money in general, or has something made you feel this way? If you’ve been on a losing streak recently, this could be a contributing factor. A large loss could also make you feel more worrisome. Or perhaps you’re generally an anxious person that is feeling more on edge from normal trading emotions. Once you’ve confirmed that you are feeling fearful, remind yourself that this is a perfectly normal emotion in trading that can be dealt with.

Step #2: Don’t Let Fear Stop You

Once you know where your fear is coming from, you can think about the emotion more clearly. Say that you’re preparing to exit a trade. At this point, you should ask yourself if there are valid reasons to exit the trade, or if you only want to close out because you’re afraid of losing money. If it’s the latter – you need to stay in the trade until you have a reason to exit. Know that it’s ok to step away from your computer if you start feeling overly fearful or anxious in these moments, as a quick break can really help you calm down. Staying in the trade for longer is the option that is more likely to bring you in more money, as long as you have evidence that the trade will be successful. 

Step #3: Start a Trading Journal

It would be nice if every forex trader kept a trading journal, as these handy little record keepers can provide deep insight into what is going right or wrong with your trades. Sadly, a lot of traders don’t use a trading journal, or they might start out with one only to abandon it down the road. For those that have been feeling fearful and closing positions too early, it’s a great idea to either start a journal or to make sure you’re logging everything in detail in the one you have. As you work to deal with overcoming the fear you’re feeling, the journal will help you to see if you’re making improvements or stuck making the same mistakes.

Categories
Forex Psychology

Changing Your Ways: How to Break Bad Trading Habits

In order to find out your bad trading habits, we need to have a trading journal set up and for it to be full of information. The information is stored in this journal should include things like your entries, exits, any changes to trades, the results of the trades, how long the trade was held […]

In order to find out your bad trading habits, we need to have a trading journal set up and for it to be full of information. The information is stored in this journal should include things like your entries, exits, any changes to trades, the results of the trades, how long the trade was held […]

In order to find out your bad trading habits, we need to have a trading journal set up and for it to be full of information. The information is stored in this journal should include things like your entries, exits, any changes to trades, the results of the trades, how long the trade was held for, and much more, basically as much information that you can fill it with. You can then use this information to look for habits, things that you have been doing consistently, and in the case of bad habits things that have consistently been having a negative effect on your trades.

As a side note, if you have not started to record your trades in a journal, then ensure that this is the next thing that you start to do, it is an invaluable source of information and can be used on a regular basis to improve your trading and to make you a better trader.

When looking through your journal, you may find quite a few things that have caused your trades to go bad, it may look like a lot of work, but it may not be quite as bad as you think. A lot of bad habits often stem from the same thing, there could be a single underlying habit which is then causing everything else to take effect. So take a look through to see if there are any characteristics of these trades that are similar to each other. As an example, if we think of a few different issues that can very easily arise, you close a trade early, set your stop loss a little too tight and avoid taking a good trade setup every now and then. Those seem like three completely different issues which by themselves they are, but there is a single underlying factor that links them all, a fear of losing.

We can use this and by dealing with that single underlying issue, it can help us to get over al three of those issues, there may, of course, be something else in there too, but the major factor that links all three together is the fear of losing, so dealing with that will help reduce the likelihood of all three issues recurring. It is all well and good identifying the issue, but we then need to do something about it, and that is where this article comes in. We are going to be looking at some of the things that you can do in order to help get yourself out of these bad trading habits and then become a much more confident and consistent trader.

Use a trading journal:

We touched on this earlier, but you need to be journaling your trades. You just need to. A trading journal gives you so much information, it gives you such a fantastic insight into your trading and your trading habits. You will not be able to deal with your bad habits if you do not know what they are. Just take a few minutes before and after each race to jot things down, it won’t take you a long time to do, in fact, once you have been doing it for a while it will be like second nature to you and can be done pretty quickly. When you are feeling uneasy, write it down, when you come out too early, write it down, just write everything that you do down. It isn’t hard, it does not take too long, so just do it, if you want to be a successful and profitable trader then you need to be doing this.

Talk to yourself:

You have probably been annoyed at some time in your life when you have been trying to do something but the person next to you is reading aloud or talking to themselves. They aren’t necessarily doing this because they are a little crazy, they are most likely doing this as a way of confirming the information or what they are doing with themselves as a way of being sure that they are doing the right thing. There is no harm in this and if you experience a number of bad habits, doing this yourself could help you get over them and nip them in the bud early on.

If you talk to yourself and question what you are doing, it makes you think about it more, this can help you to recognise that one of your bad habits is trying to rear its little head. At this point, you can realise this and then take action to avoid it. This is your first opportunity to tackle a habit, so do not be afraid to talk to yourself or to even question what it is that you are doing, and doing it out loud just makes it a little more real.

Talk to someone else:

Just like when talking to yourself, when you talk to someone else, they may well be able to see and recognise habits that you could not otherwise see, which can then allow you to deal with these habits. Talking to others who have experienced similar things can also help you to work out what you can do to try and avoid those habits from happening again. Getting experience first hand from other people is a fantastic way to get around them as it confirms to you that you are not alone, this habit is normal and if others have gotten over it, so can you.

List the triggers:

It is a good idea to write down the triggers for these bad habits so that you are always aware of what they are. The thing about habits is that they often happen without us knowing that we are doing it, so knowing what he triggers will allow you to work out if you are about to move into one of these habits or if you are already doing one. Just write them down and pin them up as a reminder of what you are looking out for.

Walk away:

Sometimes you need to take the more drastic measure of simply walking away, this may seem counterproductive because you are simply walking away from your bad habits rather than trying to deal with them, but it is not quite that straightforward forward and it depends on what your habit is. There are many traders that are fantastic when they start out, but after a couple of hours in front of the computer, their habits start to come out, cutting corners or getting anxious. This is a good time to take a break, simply walk away from the computer for a short period of time in order to calm yourself and to compose yourself again, this simply removes the opportunity for the habit to occur. It may seem simple, but it is an extremely effective way of avoiding bad habits.

So those are some of the things that you can do to try deal with your bad trading habits, there are of course other things that you can do, and some habits simply work themselves out, what is important is that you are able to recognise your bad habits and are then willing to try and work on them to ultimately remove them from your trading arsenal completely.

Categories
Forex Psychology

Keeping Your Confidence Level Up During A Slump

There will be times during your trading career when you go through a trading slump, it is inevitable and will happen to every single person who has been trading for a longer period of time. These slumps occur when the market conditions change into a scenario where you are not as comfortable with it, your […]

There will be times during your trading career when you go through a trading slump, it is inevitable and will happen to every single person who has been trading for a longer period of time. These slumps occur when the market conditions change into a scenario where you are not as comfortable with it, your […]

There will be times during your trading career when you go through a trading slump, it is inevitable and will happen to every single person who has been trading for a longer period of time. These slumps occur when the market conditions change into a scenario where you are not as comfortable with it, your strategy is not as effective in these conditions and so you make more losses than usual. Again, everyone will go through this, multiple times during their career, so it is nothing to really worry about, although we do anyway.

You often hear stories where people have had tense of profitable months in a row, even years without a losing month, then things start to change, the markets shift and that person will struggle to put more than a single winning month in a row together. This happens and it will happen to you. It can be really disheartening, stressful and this makes it incredibly easy to start blaming yourself for it, to blame yourself for what is going wrong and this makes it very easy to simply overlook the things that you are doing really well. That is simply part of human nature, to concentrate on the bed.

The problem with this sort of attitude and outlook is that it will simply make things worse. When you are performing badly at something, and someone tells you how badly you are doing, what is your reaction? For many it is to simply shrink down inside themselves and to just try and get through it without putting in much more effort, for some, they completely give up and walk away. This is what your own mind will be doing to you when you are going through one of these slums. The negative thoughts and emotions will flood in, concentrating on what is going wrong will only cement these thoughts into your mind.

This is why you need to be able to focus your mind on the positives, things were fantastic before and so they will be again, you are clearly doing things right so we need to look at that. It can be very hard to keep your confidence levels up during a slump, but we have come up with some ideas that could potentially help you to remain a little more confident during one of these slumps. They may not work for everyone, but it is certainly worth knowing that they are there to try, as you never know which one will work for you, so let’s take a look at what some of the things that you can do are.

Don’t Dwell, Act!

When you are in one of these little slumps, it is easy to simply sit there thinking about the negatives and everything that is going wrong, this is natural. You need to think about how this will help you, the short answer is that it will not. Sitting there and just thinking about the bad will only make your confidence drop even more, or even make you want to give up and quit completely. What you need to do is to take action. You should have a trading journal, use that to find out what is going wrong, and then do something about it. If you do not try and change whatever it is that is going wrong, then you will find it very hard to get out of this slump any time soon. So do not simply sit there thinking, act on it, get rid of the bad habits, and whatever else could potentially be causing the slump that you are in.

Look at What Went Well

It is important that you are able to shift your focus every now and then, shift it to look at what has been going well. This is easier said than done but it is vital to getting out of that slump that you are in. You will have had some trades that worked, take a closer look at them to see why they worked well, parts of your strategy will still be valid and so should still be used. Remember that you were able to be successful in the past, so you will be able to be again, this can help to give you a little boat to your confidence levels. So remember to think of the positives, not just the negatives when you are in this sort of situation.

Change Strategies

Sometimes these slumps are no fault of your own if your strategy works in specific conditions but the markets have now moved away from those conditions, of course, it is going to struggle to remain profitable. This is where you need to step in, it is always good practice to have a good understanding of a number of different strategies, they can then be used during different market conditions. So once a single strategy stops being effective, you can simply switch over to a more appropriate strategy without having to go into a slump at all. There will still be performance slumps, but being able to switch over should make it far easier to be able to get out of it, or to at least limit the damage of it. So if you only know one strategy, get learning another one or two.

Find a Niche

A niche is basically a specialisation, it is where you focus your trading on a single or specific aspect of it. This can help to make you an expert at a certain style of trading and helps to avoid the mismatch or blur of different strategies and ideas. You need to get an understanding of what it is that you are good at and then use that as the trademark of your trading, to have that at the centre of your strategy. Once you have it, stick with it, work with it and you may find your trading to be a little more enjoyable, even during a slump.

Talk to Others

When you are going through a slump, it is more likely that someone else will be too. Being part of a trading community will allow you to communicate with others, to get an idea of how others are doing too. It may sound bad, but knowing that others are having a difficult time too can help to build your own confidence as you know that you are not alone in your experience. You can then also use these people to generate ideas of how you can get out of this situation. Find out what they have done in the past to get through it, work out if you can do similar things to them, or make adjustments to take their ideas into account. Do not let it change your style completely, you need to remain true to your overall strategy, but there is no harm in getting ideas from others. It is also a good way to vent your frustrations.

So those are some of the things that you can do to hopefully keep your confidence during a slump. It is never a good situation to be in, people have lost a lot of money in them or even quit trading completely. Try to stick with it, look for your positives and there is absolutely no reason why you cannot get out of a slump, it may take a while, but you will get through it so keep your head up and keep on trading.

Categories
Forex Basics

Signs That You Are Ready To Trade Live

Trading on a live account and doing it well is the ultimate goal of many traders, well apart from the dream of owning a private yet of course. There are however a number of different things that you need to consider before you can think about going live, so we have come up with a […]

Trading on a live account and doing it well is the ultimate goal of many traders, well apart from the dream of owning a private yet of course. There are however a number of different things that you need to consider before you can think about going live, so we have come up with a […]

Trading on a live account and doing it well is the ultimate goal of many traders, well apart from the dream of owning a private yet of course. There are however a number of different things that you need to consider before you can think about going live, so we have come up with a number of different signs that point to the fact that you are ready to go live and to trade with your real money in order to start working towards that financial goal that you are looking for.

Are you consistently making a profit?

People often get a little confused when it comes to being profitable and winning. When we talk about being consistently profitable it does not mean that you need to win every trade, in fact, many traders lose more trades than they win but still remain profitable overall thanks to their strategy and risk management plans. We need to make it clear that losing is a major part of trading and is not avoidable at all.

If your strategy is set up correctly then it really doesn’t matter too much if you have lost a trade or two the previous week, it does not mean that your strategy doesn’t work and it certainly does not mean that you are not a good trader. What you should be focusing instead is continuing with your strategy in order to find some new higher probability trading setups for future trades, you should also come up with strategies and risk management plans that can help to minimise the losses that you incur with a losing trade and maximise the profits that you make with a winning trade.

You need to monitor your profitability over a long period of time, most like to say six months, once you have done this and you have remained consistently profitable over that sort of period of time, it can be a great sign and indicator that you may well be ready to go and move onto a live trading account.

Do you have clear risk management plans in place?

If you ask 100 traders what the most important part of trading is, you will probably find that quite a few of them will tell you that it is risk management, and for good reason. Proper risk management is one of the major things that stands between you losing a little with a losing trade or losing your entire account. You need to ensure that before you even think about going onto a live account that you have a clear cut risk management plan that you are consistently following and stick to it at all times. It is relevant that you stick to it, as the moment that you deviate from it, the overall profitability of your trading strategy will shift and this can have a detrimental effect on your overall trading.

So before you consider going live, ensure that you have a set of rules for your risk management set up. Something that is easy for you to follow and also easy for you to stick to, if you are finding it difficult to always follow it, then you may need to think about potentially changing a few things so that you can. If you have this setup and you are able to stick with it, then this may be another sign indicating that you are ready to move onto a live account.

Do you panic when a trade is losing?

Are you able to keep your cool when a trade is going the wrong way? If so then you are on the right track. If you do still panic then you may want to think about how much you are investing and whether or not you are risking and investing a little too much. It’s not an easy thing to do, to keep things cool when you can see your money going down, but it is something that you will need to get used to because it is going to happen a lot. In order to get around this, create a trading plan, a detailed one which includes your risk management plan and this will help you to keep focused and to have a broader view of how things are going, rather than just concentrating on the current trade. Once you are able to stay cool even with those losing trades, that is a sign that you may be ready to go into some live trading.

Do you still take your losses hard?

A loss is never seen as a good thing (unless you can learn from it) but you need to look at how you take these losses. Does it really upset you? Does it make you want to win back the money? Or are you simply able to shrug it off and move onto the next trade? If it is the latter, then you may be ready to move onto some live trading. If you are still struggling with losses you need to find out why, whether you are simply risking too much or for some, trading is just not for them, especially if they are so risk-averse. As soon as you are able to take them well, you can tick this off as a sign that you are ready to progress.

You have found the right broker.

For many, finding the right broker is easy, because they do not have many requirements, but for others, it can be a long process to find the one that is right for you. Before you go live, you need to be sure that you are happy with the one that you are using, afterall you are going to be depositing some of your hard-earned money into it. You need to ensure that you are happy with the spreads, the commissions, and the slippage that may occur. You should also ensure that you have spoken to the support team and that the appropriate deposit and withdrawal methods are available. Only deposit your funds into an account that you are actually happy with, if you have friends already using one that can vouch for it, then that is even better. Just be careful of the not so friendly ones that are just after your money.

So those are a few things to think about, if you are able to tick them all off then it is a good sign that indicates that you may well be ready to head out into the big world of live trading. Remember to take your time, there is no rush to get there, but once you do, stick to what you were doing in the demo account, do not get carried away and you should be able to become a profitable trader.

Categories
Forex Psychology

The Pressures Of Forex Trading

Pressure, the incredibly strong feeling of dread or stress that can come over you when doing pretty much anything when there is something on the line. In regards to trading, that something is your account balance. This is even more apparent if you are currently trading as your full-time job and you are counting on it for paying things like your bills or to purchase your weekly shopping. Pressure can come from both within and from outside sources, so let’s take a little look at the sort of things that can cause pressure and the effects that this can have on both you and your trading abilities.

Pressure, the incredibly strong feeling of dread or stress that can come over you when doing pretty much anything when there is something on the line. In regards to trading, that something is your account balance. This is even more apparent if you are currently trading as your full-time job and you are counting on it for paying things like your bills or to purchase your weekly shopping. Pressure can come from both within and from outside sources, so let’s take a little look at the sort of things that can cause pressure and the effects that this can have on both you and your trading abilities.

Pressure, the incredibly strong feeling of dread or stress that can come over you when doing pretty much anything when there is something on the line. In regards to trading, that something is your account balance. This is even more apparent if you are currently trading as your full-time job and you are counting on it for paying things like your bills or to purchase your weekly shopping. Pressure can come from both within and from outside sources, so let’s take a little look at the sort of things that can cause pressure and the effects that this can have on both you and your trading abilities.

Have a little think about the sorts of things that cause you to feel pressure, normally it would be some sort of deadline that you need to meet, maybe you are nowhere near making it. This same pressure can come with trading, e briefly touched on the fact that you may be relying on the money that you will make in order to pay your bills or purchase your weekly shop, this sort of pressure can lead you to making rash trading decisions and making additional risky trades that are outside of your trading plan, simply so you can make enough to survive. This sort of pressure is not good at all, the desperation to make enough will make you throw out all caution and will ultimately cause you to lose, which in turn will increase the pressure further.

There is also the sort of pressure that you can put on yourself, if you consider yourself to be a perfectionist, every single loss that you take will be a little hit to your ego and will increase the amount of stress and pressure that you will be putting on yourself in order to do better. There is also the pressure of trading money that you may actually need, the old saying of not trading what you can’t afford to lose is a very honest and realistic approach, as soon as you start to trade with money you need, an incredible amount of pressure will come over you, knowing that if you lose it, you could be struggling in life for quite a while.

Pushing yourself to learn more, and to achieve more can put some unwanted pressure on yourself, there are no time limits, the markets aren’t going anywhere. Take your time to learn, don’t put these unnecessary stresses on yourself, there is no need to and it is completely self-destructive.

These pressures are often caused by some sort of decision that we made at one point in time when it comes to out trading, whether we deposited too much, our trades are using too much risk or we took the step to going full time too soon. It is important to think about each decision that you make, it is all well and good thinking that you will be able to deal with the pressure when it comes, but the best course of action that you can take is to avoid bringing the pressure down on you in the first place, if you can manage to do that, then you won’t have to deal with the crippling effects that pressure can have on someone.

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Forex Psychology

Self-Motivation and Self-Discipline In Trading

Motivation and discipline, some incredibly important traits that you need to have in order to be a successful trader. You often hear that trading can be quite a demoralising experience, especially when things aren’t quite going to plan, so we are going to look at some of the reasons why you need to be able […]

Motivation and discipline, some incredibly important traits that you need to have in order to be a successful trader. You often hear that trading can be quite a demoralising experience, especially when things aren’t quite going to plan, so we are going to look at some of the reasons why you need to be able […]

Motivation and discipline, some incredibly important traits that you need to have in order to be a successful trader. You often hear that trading can be quite a demoralising experience, especially when things aren’t quite going to plan, so we are going to look at some of the reasons why you need to be able to self-motivate and self-discipline yourself and different ways that you could potentially go about doing it.

Firstly, let’s look at why motivation is so important. Motivation is defined as “a reason or reasons for acting or behaving in a particular way.”. This is all based around the way that you behave, someone with low levels of motivation will be a lot slower, less engaged, and offer much lower levels of productivity to someone who is highly motivated, putting in a lot of work, getting things done quickly and ultimately enjoying what it is that they are doing.

Motivation can be a very powerful feeling and something that can make you either successful or unsuccessful. The problem with trading is that you are all by yourself, this means that there is no one else around to motivate you. In a regular job (most not all), there will be a manager or a team leader around, one of the jobs that they have been employed to do is to help motivate those around them, to motivate their team to work hard. Without that person around, it is now down to you to do that job for yourself, and this can quite often be a lot harder to do than it is to say.

Think about the ways that you can motivate yourself, what is it that gets you going? For some, it is simply the idea that they can make some money at the end of it, but this is more of a motivational goal, rather than a way of keeping yourself motivated. When you have been at the computer for a number of hours, not much has happened or you have read over some new learning for the third time. It’s boring, you want to stop, how’d you motivate yourself to carry on?

People do this in entirely different ways and it will work differently for different people. Something that you may want to try is to set yourself little goals, these can be daily, weekly or monthly targets that you want to meet. Should you achieve them, then reward yourself with a little something extra, an extra cake, those trainers you wanted, it could be anything but it must be something that you desire, and it must be something that you are willing to go without should you not achieve those targets.

Other ways of increasing your motivational levels are to add a little bit of variety into your learning and your trading, and not to pressure yourself into always be trading. Of course, that will be boring and will cause your productivity levels to really drop, instead, try to change things up, try not to do the same thing for more than one day or two days in a row. This will keep things fresh and you will continue to learn and to be productive in your trading. It can also be important to talk to others, being by yourself lonely and this can bore even the most motivated of people. It is important that you manage to get out and talk to others, talk about anything. It doesn’t need to be just about trading, this interaction can break up the monotony of trading.

We talked about speaking to others. If we take this a ste[p further, a good way of motivating yourself can be by talking with other traders, people who are going through the same thing as you. You can talk about your plans, your results and compare how people are getting on. This can go one of two ways and it will depend on your personality as to whether this is a good idea. If you decide to compare your results with others and you are doing well, this can motivate you to keep working hard. However, if you see your results and you are not doing as well as the majority of others it can either cause you to lose a lot of your motivation as you feel that you are not doing as well, or it can motivate you to work hard to achieve the same as them. This Is entirely down to your own personality, if you are the sort of person to become disheartened then we would suggest not comparing results. If you are the sort of person where it drives you to work harder, then it can be a fantastic motivation builder

So we know a bit about motivation, but what about discipline? Discipline is defined as “the practice of training people to obey rules or a code of behaviour, using punishment to correct disobedience.”. This is often another aspect of a job that is given to a manager or a team leader, but trading by yourself, you are required to take on this role and need to have the ability to discipline yourself should you do something wrong or should your performance levels drop.

When you are working for someone they will be there monitoring your progress and the work that you are doing, trading at home, you do not have someone there to do that, so you will need to do it for yourself. This can be far harder than it seems, as many people automatically assume that they are doing better than they actually are, in fact, the majority of people feel that they are doing far better than they actually are.

The first thing that you are going to need to do is to work out how you are able to assess how well you are doing, this can be done in a number of different ways. Initially, you will need to set some targets and goals that you want to achieve, these can then be used as the overall target that you will measure your progress and performance on. They need to be realistic and achievable, as setting targets too high, will only result in you missing the and then feeling demotivated.

You will also need to think of some potential sanctions should you not be performing to the standard that you feel that you should be or if you are falling far short from your targets. This could simply be something like putting $10 into a saving pot that you can only access once you reach your goals, or that you don’t get that slice of cake that you usually have after a meal, this is all about ensuring that you keep your performance levels up. It can be very difficult to self-discipline yourself.

While what we are talking about is what you do yourself, if you are living with a family member, you could ask them to keep track of your targets and to see how you are getting on it’s not quite self-discipline but it works well for those that are not able to control and discipline themselves.

Self-motivating and self-disciplining is not an easy task and can be very difficult for a lot of people. However, getting it right can make working by yourself and trading by yourself very rewarding and can build up your abilities as an individual and as a leader. If you have what it takes then it can create a fantastic at home trading career.

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Beginners Forex Education Forex Basics

Should You Trade Forex Completely Alone?

When you see traders in the movies, they are either portrayed as one of two things, a single person sat in their bedroom or office, glued to the computer with very little interaction with anyone else. The other is in a loud and busy room, shouting down the telephone, even though they are surrounded by […]

When you see traders in the movies, they are either portrayed as one of two things, a single person sat in their bedroom or office, glued to the computer with very little interaction with anyone else. The other is in a loud and busy room, shouting down the telephone, even though they are surrounded by […]

When you see traders in the movies, they are either portrayed as one of two things, a single person sat in their bedroom or office, glued to the computer with very little interaction with anyone else. The other is in a loud and busy room, shouting down the telephone, even though they are surrounded by others, they are fixed on their own task, ignoring all around them and simply trying to complete their current task. While they are very different environments and situations, the traders are very similar in the way that it is only them trading, they are not working with others.

This is the view that a lot of people come into trading thinking, they are assuming that trading is a job for those that do not like to interact, or if you do pick it up, you are not meant to be talking with others. The truth is, that this is both the case and it is not the case. It is true that you should be doing your trading for yourself (not using signals for expert advisors to do it for you), but there is nothing to say that you should not be interacting with others, in fact, we would recommend it as it brings in a lot of different benefits, and so we are going to be looking at the advantages of both trading alone and trading with others, as both bring different advantages to the field.

Let’s start with one of the major reasons as to why a lot of people trade alone, it’s the simple fact that the fewer people that there are around you, the fewer distractions that there are. Distractions can be a real killer for a trader, it can completely take you out of your stride and can even cause you to make mistakes and so ultimately can make you lose money. So being able to get rid of those distractions can help. When it comes to trading with others, this is simply about others talking to you, asking questions, or simply making noises around you which can distract you from what you are doing and take your concentration away from what is important. If You are one of the many people that get far too easily distracted by others, then maybe doing the majority of your trading alone will help. Of course, this does not mean that you need to seclude yourself completely.

Having said that, even if you trade completely alone there are still reasons to try and get in contact with others, the main would be to get opinions on your ideas or to get ideas from others in order to find new trade setups and to develop your own style with the input of others. If you are simply trading by yourself. How are you going to get feedback on your trading, you could, of course, use your trading journal, but if your basic understanding of something is wrong, then to you, your journal would be telling you that you are doing something right and doing it well. When in reality, that thing that you are doing may be detrimental to your trading, the only way that you will get to learn this is if you are talking to other people about what you are doing. So while people can be a major distraction, it is important that you do interact with them, just do it outside of your trading time. You can also get ideas from others in trading communities, ideas of good assets to trade and good trade setups, even completely new strategies, so make sure that you use people for knowledge again, just do this outside of your trading time so it does not become a distraction.

While we have stated that getting ideas from others can be helpful, it can also be counterproductive and can make things a little complicated. Let’s imagine that you have your idea already, you go online and there are others showing you that this is not a good idea or giving you little things to add, this causes you to go back and change things. You may end up changing quite a lot, so now your strategy and risk management plan is nothing like it was before. This can make it harder for you to actually understand what it is that you are trading anymore. So while talking to there may be fine, you need to be sure of your own strategy, make sure that anything that you do change, you understand exactly why, otherwise you need to stick to your original strategy, this is what you set up and it is in line with how you wish to trade, after all, it is your strategy, so don’t let others dictate it.

A lot of people who have come into trading have come from their previous job, being able to get rid of your boss was one of the major draws of trading so being involved with others is not really what they are looking for. This is perfectly understandable, trading by yourself means that you are in charge, you are taking responsibilities for your trades, your wins, and your losses. This is a good situation to be in as you do not want to be blaming others. If something goes wrong, you did and so it is up to you to find out what went wrong and to rectify it, the same goes for wins, the wins are your own and so you should feel proud of them. If others have given you the trade ideas or changed the way you trade then it can feel like a hollow victory and like you are back at your old job listening to your manager. Having said that, listening to others is not necessarily bad, just don’t let them influence your trading too much.

We are going to throw this one in there, other people can be very valuable when it comes to their trading signals or even copy trading. You should really be trying to develop your own style of trading so that you can trade yourself, but there are those out there that prefer to bypass that and simply copy other people’s trades without really understanding why. If this works for you then there is no problem with it, but it is important that you get to know the person that you are putting your trust in. Keep in constant contact with them, get to know them better, and what it is that they are trading. The last thing that you want to do is to simply blindly follow the trades, so there ain’t really much interaction, but it is important that you make the most out of the interaction you can have with the trade provider.

So those are some of the reasons why you should, or possibly shouldn’t trade alone, each person will have a different opinion of it, some will love being by themselves while others will need the human interaction that they get from others. What is important is that you trade the way that is right for you, just do not be afraid of being out of your comfort zone every now and then, especially if your trading demands it.

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Beginners Forex Education Forex Basics

Why It’s Sometimes Better Not to Trade

We are always on the lookout for that new trading opportunity and ways to give us more trades and therefore more profit. It’s great when we find one, all of the requirements set out by your trading strategy have fallen into place and it’s the perfect trade. The problem is that pinpoint perfect trades don’t […]

We are always on the lookout for that new trading opportunity and ways to give us more trades and therefore more profit. It’s great when we find one, all of the requirements set out by your trading strategy have fallen into place and it’s the perfect trade. The problem is that pinpoint perfect trades don’t […]

We are always on the lookout for that new trading opportunity and ways to give us more trades and therefore more profit. It’s great when we find one, all of the requirements set out by your trading strategy have fallen into place and it’s the perfect trade. The problem is that pinpoint perfect trades don’t come along all the time, in fact depending on your strategy it could take a week for each one to fall into place. So if things aren’t there, how do we put on enough trades to ensure we reach our targets? Well, they will come, what you do not want to do is force them, so sometimes it is actually better for you to miss that trade, sit it out and let the opportunity pass and you will be better for it, take the trades that are there, not the ones that you want to take.

So let’s take a look at some of the reasons why it may be better to not take those trades.

There are days when trading when you just do not feel up for it, we all have our off days we have days where we are that little bit extra tired, or maybe a little worse for wear after a heavy drinking session. Do you think that it would be appropriate to trade in these conditions? Probably not, you are far more likely to miss things or to read something incorrectly on the charts which could then lead to mistakes and bad trades being made. If you are not feeling like you are up for trading and are not at least 90% of your best, you should avoid it. Mistakes can and will be made when you are feeling tired, so it’s best to avoid trading entirely in this condition. You can, of course, look at the markets, but we would advise not putting that trade on, at least not on a live account.

Another reason to possibly avoid putting on trades is if you have had a number of different trades lose in a row, known as a losing streak. While these losses may not have anything to do with you doing something wrong, it is often a good idea to take a step back. While you may not have been doing anything wrong when it comes to your strategy, those losses can have a psychological effect on you which could potentially put you at risk of making some bad trading decisions. There is no harm in avoiding a trade or two to reevaluate your strategy, just in case something may be wrong or in case you are feeling the stress. Do not be afraid to take those breaks and skip those trades.

Another good reason to avoid putting on that trade is the simple fact that you are just not certain about the trade. If you are not 100% that a trade will work, then there is no harm in not trading it. In fact, this behaviour is probably advised over taking something you are not fully sure of. Even if you are sure, if there are different things in other technical or fundamental analysis that you have done which could suggest otherwise, this could be a reason not to take that trade. If they are indicating some uncertainties then this should actually be a warning sign that your trade may not be as safe as you may think it is.

If your risk to reward ratios are not right, or you have been placing trades with lot sizes that are too high, then this is a good time to stop your trading, do not put on any more trades, you need to get this sorted. Even if you have been profitable and the majority of your trades are right, it does not mean that it is right. You need to reevaluate your trading and the lot sizes that you are using.

Sometimes things just do not work for you, there are days where you just can’t seem to work out the markets, this is nothing bad on your side and the markets are not acting any stranger than usual, you are just simply out of synch with them. There Is no harm in using this as a time to learn instead, do not place trades when you are in this situation, they will only end up being bad trades as your concentration levels are just not there. If you feel like you don’t have the attention span for it, or you are struggling to remain focussed, do not try to force trades, you will surely miss something which will only lead to losses.

So those are a few of the things that could and should cause you to potentially miss out on some trades and to not place them. There is no harm in not placing trades, in fact, it can help you, not only will it prevent you from making any potentially bad trades, but will also give you more opportunities to learn and develop as a trader.

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Beginners Forex Education Forex Basics

Is Forex Trading Taking Over Your Life?

Trading can be an addicting thing, both in a good way but also in quite a negative way, it can be in your head no matter what you are doing and you can wake up in the middle of the night wanting to trade, these are signs that may be trading and forex is taking […]

Trading can be an addicting thing, both in a good way but also in quite a negative way, it can be in your head no matter what you are doing and you can wake up in the middle of the night wanting to trade, these are signs that may be trading and forex is taking […]

Trading can be an addicting thing, both in a good way but also in quite a negative way, it can be in your head no matter what you are doing and you can wake up in the middle of the night wanting to trade, these are signs that may be trading and forex is taking up just a little too much of your life.

This is quite a common thing, especially for newer traders, so we are going to look at ways that you can tell that trading is taking over your life.

You wake up thinking of trading.

When you wake up in the morning, what do you normally think about, it is normally about needing to use the toilet or something that you have coming up in the day or over the next few days. If you suddenly start waking up and are constantly thinking about the markets, what you can trade, or what a certain currency value may be, then you’re probably getting a little addicted to trading. What is even worse is if you manage to wake up in the middle of the night, for no other reason than to think about trading, not a great sign and not something you will be thanking your brain for.

You dream of trading.

So waking up thinking about trading is bad enough, but when trading starts to invade your dreams too, you know that things may be going a bit too far. You will dream of wins, you will dream of losses and you will dream of different ways that you are able to alter your trading plan and strategy to be a little more successful. When it gets really bad, you may well begin to dream of trading pretty much every night, this is the stage where you need to find something else to think about, surely it can’t be that healthy to think about it every time you dram, but then again, at least it means you are interested and it is actually something that you enjoy. Dreams can also give you an unconscious view of how you are actually feeling about your trading at that point in time.

You start to check the financial sections of a newspaper.

If you are a newspaper reader, there is probably a section of it that just makes you roll your eyes, for most that would be the financial section if you have no interest in it, it doesn’t really mean much, it’s just a bunch of numbers and statistics or news about things that really have no effect on your life. Now that you trade though, you are finding yourself looking through that section for things of significance, things that could give you an idea of what you could be trading next. It still might not be interesting to you, but you will constantly find yourself checking it out whenever you have a newspaper in your hand.

You take note of the exchange rate in a currency exchange shop windows.

No doubt you have walked past hundreds of currency exchange shops, you know the ones on the high street allowing you to change your funds from one currency to another. They always have an electronic board pointing out that shows you the currency exchange rate that they are offering, most of the time you take no notice of it whatsoever, but now that you’re a trader, you take note of the exchange rates being offered. Of course, they aren’t the most accurate considering the shops are adding on quite a hefty spread in order for them to make any money, but you still take note of anything that may look out of the ordinary and can use that to research things once home.

You always think of trading.

The last time you watched a film, what were you thinking of? Probably the film right? Well not anymore, now you will be thinking about trading and thinking about trading no matter what you are doing. Watching a film, cooking dinner, washing the car, no matter what you are doing you will be thinking about what your next trade could be or that you hope that the markets will begin to turn soon. It will begin to creep into your thoughts no matter what you are doing, it can be a little annoying at times, especially when the thoughts just won’t go away. You will need to try and distract yourself with something, but that is far easier said than done.

You overthink your trades.

This one is actually about the trading part of trading when you start out, you probably take a while to place your trades, just because you are being so careful. Then you get a bit quicker at it and each trade only takes a minute or so. What can then start to happen is that you get to learn a lot more in-depth things about trading, and so you start to think a lot more about your trades, you may have the perfect setup but then you think of something and so want to check it out. This can add a lot of additional times

You talk to your friends about trading.

Let’s be honest, the majority of your friends have no interest in trading and the majority of them probably don’t know anything about it either. So now that you have learned a bit and have some experience, it is natural to want to talk to people about it, unfortunately, your friends are not the people to be talking to. They have no interest, so anything you say will go right over their head and it could also create a few awkward periods of silence here and there. You should stick to talking to them about things you all have in common, keep the trading talk to those that actually trade, although we don’t blame you if you keep on trying.

You use your trading rules in other things you do.

When you started trading, you would have created a trading plan and a trading strategy, this would have included a number of different rules. When you have been trading for a while, those rules would have been cemented into your mind, so much so that you start to implement those same rules into different aspects of your life. It can make your decisions a little slower to make and could also have absolutely nothing to do with the decision or choice that is being made. You just seem to naturally think of the same rules that have been burned into the back of your mind.

So those are a few of the things that can show you that trading may well be taking over your life. It is natural to have these thoughts and occurrences when you are really into something, learning new things and generally just enjoy doing something. So if trading is getting a grip on your life, don’t fret, just try and limit the amount of it that you are thinking of.

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Forex Psychology

Psychology That Will Blow Your Trading Account

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account. So […]

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account. So […]

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account.

So out the first pitfall is for those people who want to trade forex for the simple reason, to get rich as quickly as possible. Sadly, this is the view of Forex that a lot of people have, mainly because of all those people of social media such as Instagram that are posting their fast cars and million-dollar houses, in case you didn’t know, none of it is real. They do not have this money, they do not own those cars, they have either taken pictures from other people or have rented them for the purpose of the videos, all they want to do it suck people into their affiliate programs. So the mentality that people see and gain fro these is that you can use Forex to get mega-rich, mega quick.

Forex is a long learning process, it can make you rich, but that will be years and years down the line, not within a week. Get that idea out of the mind, you need to treat it like a business, risk management, small profits, and slowly growing.

Are you afraid of losing? Much newer, especially younger traders have the idea in their mind that losing is negative, anything that makes your money go down is bad, but is it really Losses are often seen as the best way to learn, but that mentality is hard to put into someone that has been brought up being told to save their money and to avoid risks. You are going to lose, it is a part of trading, being able to understand that will help put the thoughts of a loss being bad out of your mind and will allow you to adapt rather than sitting in fear.

Do not fight the markets, you won’t always be right and the markets will try to hurt you at times, that is just the sort of asshole it is, knowing when you have been wrong is vital and so is getting out. When your strategy dictates a stop loss at a certain point leave it there, if the markets start moving against you, many newer traders will still believe that their trade was correct so they move the stop loss further down, and then further, and further again because they know the markets will turn in their favor. In the end, it continues down and the stop loss is 5 times large than it was meant to be, it triggers and most of the account has gone. Stick to your original plans, don’t alter them mid-way through as this will only lead to more losses.

A lack of discipline can cause accounts to blow and it is most likely the one that has blown the most. Having discipline means being able to stick to your trading strategy no matter what is happening within the markets or how past results have gone. Many traders when they make a loss will want to get that money back, they do this by increasing the size of the next trade, bad idea, this is known as a Martingale strategy that has blown thousands of accounts in the past. Another thing that undisciplined people do it to leave their perfectly good strategy because it has a few losses, those losses will come no matter what your strategy is, so you need to stick with it and accept some of the losses.

Are you guilty of any of these pitfalls? Take a look at tour past and see if you are or have been, getting them out of your mind is a fantastic step to becoming a successful trader.

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Beginners Forex Education Forex Basics

Should You Be Trading Forex?

Should you trade? That is a big question, it is something that you need to ask yourself, in fact, it is something that everyone who is thinking of treading will need to ask themselves, this is for the simple reason that trading really is not for everyone, in fact, it is for the few due […]

Should you trade? That is a big question, it is something that you need to ask yourself, in fact, it is something that everyone who is thinking of treading will need to ask themselves, this is for the simple reason that trading really is not for everyone, in fact, it is for the few due […]

Should you trade? That is a big question, it is something that you need to ask yourself, in fact, it is something that everyone who is thinking of treading will need to ask themselves, this is for the simple reason that trading really is not for everyone, in fact, it is for the few due to the number of requirements that it requires and the stresses that it can put on you. So let’s take a look at what sort of things are required, so you can work out whether it is the right thing for you.

Do you have disposable income?

One of the main rules of trading is to never trade with money that you cannot afford to lose, so you need to be able to say yes when asking yourself whether you have disposable income. This is money that will not affect your life in a negative way should you lose it. As soon as you get into the territory where you will be missing out on things or even worse not being able to pay bills if you were to lose the money, then you need to take a step back and wait. Do NOT trade on money that you need, if you lose it, it can lead to a very dark spiral, so be sure that any money that you are willing to trade with, you can consider lost as soon as you deposit it into your broker account.

Do you have a lot of free time?

Time, something that a lot of us complain about not having enough, the unfortunate thing about trading, is that you need quite a lot of it. You need it for both learning and for actual trading. While you can make do with an hour two each day, and a lot of traders actually do. This will dramatically slow down the process of learning and developing your own plans. Trading takes a lot of time, the initial learning can be so intense that it can take a couple of hours to learn even the basics, so if you are struggling for a time through work and family life, you may struggle to pick it up. This is not to say that you cannot, just expect it to be a long process.

Can you deal with stress?

Stress, a major factor with trading and for a number of different reasons. A lot of people find it hard to deal with stress, when they are put under a lot of it they can either freeze up or the quality of their work takes a hard hit. With trading, you need to be able to deal with it, as soon as stress begins to take over, it will inevitably lead to mistakes and ultimately a loss of money. There are certain techniques that you can use to help reduce it such as taking breaks, but ultimately if you are not good at naturally dealing with it, you could find trading to have quite a negative effect on your stress levels and overall well being.

Do you like math?

The majority of people when you ask them whether they like math or not will simply state no, most people hate it. Trading has a lot of similarities with math and uses it in pretty much every aspect, working out take profit levels, how much to risk, currency changes, resistance levels, all of it requires an aspect of math, yes there are calculators for a lot of these things, but you will need to be able to get a grip on the underlying equations and statistics if you want to become successful. So if you dislike maths, there is a chase you could dislike trading too.

Do you get lonely easily?

Trading is not really a social thing, of course, there are ways that it can be, but for the majority of people it is quite a lonely experience, you will spend a lot of time by yourself looking at a computer screen, reading, learning, practicing. The only way to get a better understanding of that experience is to do it, so there can be extended times of being by yourself You can break these up by taking breaks, going out and those sorts of things, but that doesn’t change the fact that there will be a lot of lonely nights by yourself, just you and your computer screen.

Are you a rule breaker?

A lot of trading is about making rules, when you first start you will be told that you need to create a trading plan, this plan will contain a lot of rules that you will need to follow, in fact breaking any one of them will result in what is known as bad trades. If you are something that does not have the discipline to stick to the rules, then you will end up making a lot of mistakes and bad trades.

Can you control your emotions?

Are you able to control all of your emotions, we are thinking about emotions like greed or overconfidence, one is a very negative emotion of wanting more while the other is a good emotion of believing in yourself, but both can have the same devastating impact on your trading. Trading is an emotionless thing, it doesn’t care about how you feel or what you want, it cares about the money. If you let emotions get the better of you it can cause forced trades for more risk, which ultimately will lead to losses.

Do you like risk?

Trading is risky, there is no other way to mention it, there is a reason why any service that offers trading opportunities needs to note on their site that there are a lot of risks to it. There is a good chance that you could lose everything you put in, and there is a certainty that you will lose some of your trades, the majority of them when starting out will be losses. If you are afraid of this, then trading is not for you. If you are not happy with a minimum of 1 out of 3 trades being a loss, then trading is not for you.

Do you understand that it is not a get rich quick scheme?

With its rise in popularity, also comes the rise in its advertising. The majority of adverts you see these days are from brokers offering low entry limits and great leverage, or from affiliates stating how easy it is to make money, not to mention the thousands of scammers and lies out there. You need to understand that trading is not a get rich quick scheme. In fact, those that are profitable now, probably took over a year to break even. There will be losses, there will be wins, but one thing for sure, you won’t wake up rich the next day, it will take a long time to get there.

There are of course many other things that you will need to ask yourself, but these are some of the major ones., Trading is certainly not for everyone, the majority of people who start trading will quit after a month or two, either from losing the money in their account or by finding everything a little too much. It can be overwhelming, but if you found that you are able to cope with a lot of things mentioned above, then it may be something worth trying. Start with a demo account, work your way up, it is a slow and long process, but ultimately a fantastic opportunity to make changes in your life.

Categories
Forex Psychology

Take Responsibility For Your Trades!

Do you take responsibility for your trading? We know that you will when it goes the right way, your analysis went well, you knew the movements of the markets on that one. What about when they go the wrong way? We know that some news events come out of nowhere and there is nothing you […]

Do you take responsibility for your trading? We know that you will when it goes the right way, your analysis went well, you knew the movements of the markets on that one. What about when they go the wrong way? We know that some news events come out of nowhere and there is nothing you […]

Do you take responsibility for your trading? We know that you will when it goes the right way, your analysis went well, you knew the movements of the markets on that one. What about when they go the wrong way? We know that some news events come out of nowhere and there is nothing you can do about it, but the reaction and what you do after the news events you certainly can influence. Following a trade loss, do you blame the markets? Your broker? Or the charts? Well you shouldn’t, the news is out fo your control, but everything after that was your doing.

It is easy to blame others or outside influences, but how is that going to help us improve? If we simply blame others, we won’t be looking at it as a learning opportunity, you should already be using a trading journal where you jot down everything you do, using this will help you understand where the trade went wrong and what you can do differently, a far better alternative to just blaming something else.

It is also human nature to look to others when something goes wrong when you make a mistake, you will naturally look for something to blame as this helps prevent you from the psychological strain of a failure, but again, blaming someone else won’t help you improve, you need to take responsibility for your own reading.

If we take a look at traders who copy trading signals or use a copy trading service, they are simply ignoring any form of responsibility for their trading. If a signal goes well, that trader will claim that they chose a good signal to follow if it goes wrong, they will shrug off the loss and put it down to a bad signal provider, after all, it was their trade, I just copied it. They will then go on and look for another signal provider to follow. The trader has no idea what the trades are made and no idea why they won or lost. It is all about having none of the stress and responsibility of losing.

There are others that will simply blame the markets outright, put in a trade but it then gets stopped out, it is the economic news falt, it is the whales stop loss hunting, it is everything but their fault, not a great way to trade and certainly not a great way to learn.

There are then those people that use Expert Advisors (EAs) to do their trading fro them, any losses from the EA are obviously the fault of the EA and its bad programming, nothing to do with the choice to use it or to give all responsibility to he robot instead of yourself. What are you earning fro musing the EA, how has your knowledge of trading improved?

You should never try to avoid the responsibility of a loss, by taking it onto yourself, you are giving yourself the perfect opportunity to learn and develop yourself to be a better trader. While it doesn’t always feel great to take responsibility for a loss, it is paramount that you do it, much like anything in life, a loss is a learning opportunity and the only way to improve is to fail.

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Beginners Forex Education Forex Basics

The Old But Gold Rules Of Forex Trading

There are a lot of rules out there that people say that you need to stick by, some of them are simply an opinion, others have been around for years, we are going to be looking at some of the original rules set out by early traders which still ring true today, they are all […]

There are a lot of rules out there that people say that you need to stick by, some of them are simply an opinion, others have been around for years, we are going to be looking at some of the original rules set out by early traders which still ring true today, they are all […]

There are a lot of rules out there that people say that you need to stick by, some of them are simply an opinion, others have been around for years, we are going to be looking at some of the original rules set out by early traders which still ring true today, they are all things that are regularly told to people, yet people still manage to not take them seriously.

Create a Plan and Stick With It

You must have been told about this one when starting up, but you need a plan, a plan that you can stick to. So what does this actually mean? The plan that you create needs to contain a few different things, the strategy that you will be using, a risk management plan and a money management plan. If you have these three things then you have a recipe for success, however, it will only be a success if you stick to it, as soon as you deviate from the plan, you will begin to experience far more losses than when trading with it.

Use Stop Losses

Any trading strategy with its weight will have stop losses built into it, these enable you to limit the number of losses that you will be able to take on a single trade, they are also part of what works out the risk and reward ratio of a strategy. Stop losses are vital, they have saved thousands of accounts and will continue to save thousands more, as a trade goes against you, it will help to protect your account by closing before you get too far into the negatives. Never trade without them, when they get hit it can be a little disheartening but you should understand that they may have just saved your account.

Learn How to be Patient

The markets can be boring at times, really boring. When they are not doing what you need to do for your strategy to work, you can’t really do anything. The last thing that you want to do is to get bored and start to place trades that are outside of your strategy, instead you need to learn to wait. Having the knowledge that your strategy will work when you need to deploy it should be enough, otherwise, take a break and walk away from the markets. Being patient will enable you to get into the markets only at the optimal times instead of increasing risks and forcing trades.

Only use Techniques and Analysis that Suit Your Strategy

Part of learning and developing a strategy is that you know it inside out, you know everything that there is to know about it and the analysis that is required for it. So why would you use something else that doesn’t actually fit in with your strategy? The easy answer here is that you shouldn’t. You should only be working with things that actually fit in with your strategy, it is what you know and it is actually relevant to the trades that you will be making, using things that arent is just wasted energy and time.

So those are a few of the older rules with trading, there are of course plenty of other rules that are just as relevant to trading and for newer traders. It is important that you find a set of rules that work for you, but sticking to your plan, using stop losses, learning patience, and using techniques that are relevant to your trading plan should be top of that list.

Categories
Forex Psychology

Self-Calming Techniques for Forex Traders

Forex trading is known to cause a rollercoaster of emotions – from excitement and self-fulfillment, to anxiety and bitter disappointment, along with every other emotion in between. Sometimes, the best thing to do is to step away and take a break from trading until you can get your emotions under control. However, many traders don’t want to miss out on opportunities, so taking a break from trading might be difficult. One of the best ways to get yourself more level-headed is to figure out a self-calming technique that works for you. Some of these can be practiced while trading, others might require you to step away for a short time. Either way, these techniques can help clear your mind so that you can get back to trading. Here are some popular calming techniques:

Forex trading is known to cause a rollercoaster of emotions – from excitement and self-fulfillment, to anxiety and bitter disappointment, along with every other emotion in between. Sometimes, the best thing to do is to step away and take a break from trading until you can get your emotions under control. However, many traders don’t want to miss out on opportunities, so taking a break from trading might be difficult. One of the best ways to get yourself more level-headed is to figure out a self-calming technique that works for you. Some of these can be practiced while trading, others might require you to step away for a short time. Either way, these techniques can help clear your mind so that you can get back to trading. Here are some popular calming techniques:

Forex trading is known to cause a rollercoaster of emotions – from excitement and self-fulfillment, to anxiety and bitter disappointment, along with every other emotion in between. Sometimes, the best thing to do is to step away and take a break from trading until you can get your emotions under control. However, many traders don’t want to miss out on opportunities, so taking a break from trading might be difficult. One of the best ways to get yourself more level-headed is to figure out a self-calming technique that works for you. Some of these can be practiced while trading, others might require you to step away for a short time. Either way, these techniques can help clear your mind so that you can get back to trading. Here are some popular calming techniques:

Practice Conscious Breathing

Perhaps one of the quickest ways to calm yourself after a big loss is deep breathing. This is a simple, yet effective solution that helps you get your head back in the game without missing anything. You just need to take a few slow deep breaths to expel tension from your body. Most people recommend taking about 10 deep breaths. Then, you can get back to trading almost immediately.

Listening to Music

Music can really help to influence our emotions, so calming or happy, upbeat songs can help out when you’re feeling down. This is also something you can do while trading, so you don’t have to worry about missing a good opportunity. Just try not to turn up the music too loud, otherwise, it could become distracting. You’ll also need to pick the right kind of tune and be sure to avoid depressing songs.

Try Positive Self-Talk

When you’re trading, is your inner voice calm and relaxed? Would you want someone else to talk to you in the same way you talk to yourself? If the answer is no, then you need to be kinder to yourself. Tell yourself that everything is going to be ok and that everyone loses sometimes. Don’t beat yourself up when you make a mistake – everyone does.

Try Meditation or Yoga

Many people swear by calming exercise techniques like yoga and meditation. These practices aren’t only good for dealing with the stress of trading and might actually help with other stressful aspects affecting your life. Of course, this one does require you to step away from your device for a while. In some cases, it might be better to unplug completely for a while after all. Then, you can come back for a fresh start with a clear mindset and more focus.

Use Grounding Techniques

Grounding is an easy task that involves focusing on the physical world instead of your own inner thoughts. This is another quick solution that can help calm anxiety or fear that might be caused by forex trading. Here are a couple of examples of grounding techniques but know that there are more examples online or you can even come up with your own:

  1. Name 5 things you can see, 4 things you can hear, 3 things you can immediately touch, 2 things you can smell, and one thing you can taste at that moment.
  2. Count to 10, or say the alphabet.
  3. Clench and release your fists.
  4. Place a cool washcloth on your forehead.

As you can see, these are all simple but effective ways to calm yourself down and they can be done right from your trading station.

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Forex Risk Management

The Importance of Risk Management in Trading

While forex trading comes with several perks, like being your own boss, flexible hours, and the opportunity to become wealthy, the biggest drawback is the risk factor. There’s always a chance that you’ll lose money, no matter how well-educated you are. If you want to minimize your losses as much as possible, then it is crucial to have a good risk-management strategy working for you. Otherwise, you could quickly become one of the many beginners that walk away from trading for good.

While forex trading comes with several perks, like being your own boss, flexible hours, and the opportunity to become wealthy, the biggest drawback is the risk factor. There’s always a chance that you’ll lose money, no matter how well-educated you are. If you want to minimize your losses as much as possible, then it is crucial to have a good risk-management strategy working for you. Otherwise, you could quickly become one of the many beginners that walk away from trading for good.

While forex trading comes with several perks, like being your own boss, flexible hours, and the opportunity to become wealthy, the biggest drawback is the risk factor. There’s always a chance that you’ll lose money, no matter how well-educated you are. If you want to minimize your losses as much as possible, then it is crucial to have a good risk-management strategy working for you. Otherwise, you could quickly become one of the many beginners that walk away from trading for good.

The first mistake many beginners make is overleveraging their trades. If a broker offers a leverage of 1:1000, that means you can multiply every $1 you’ve invested times a thousand. This would allow you to make a $1,000 trade with only $1 in your trading account. Leverage is one of the biggest draws to forex trading since it allows you to increase your investment power. However, you shouldn’t use the highest leverage just because you can, otherwise, it can backfire and cause large losses. Leverage is often referred to as a double-edged sword, and beginners often find themselves on the sharp edge. Resisting the temptation to use higher leverage at first is crucial for beginners to see success later.

Monitoring the size of your positions is another important step. Many professionals recommend that you only risk 1% of your account’s balance on any one trade. This may not equal a large amount of profits, but it helps to reduce losses if things don’t go in your favor. Remember that winning even a small amount is better than losing a lot of money. Setting a stop-loss order is a precaution that causes the trade to close if a certain loss level is reached. Traders would need to figure out how many pips they want to risk and then set their orders. Beginners should also recognize the point of when to take profits. Putting a close order position in place to take profits at the appropriate level of resistance or using candlestick recognition or moving average crossover strategies can help accomplish this.

One of the best things you can do to set yourself up for success is to have a good trading strategy. The internet is filled with different kinds of strategies that suit the needs and skill levels of every different kind of trader. Having a plan to follow will help you know what to look for and you can even monitor and improve your strategy with a trading journal.

Managing your risks in forex trading will keep you afloat where others have failed. Setting a good trading plan without risking more than a small percentage of your capital sets up a firm foundation. Then, you can set stop-loss orders and take profit levels to further minimize your risk. Choosing appropriate leverage is another important factor. If you go into the market without a strategy, risking 10% or 20% per trade, then you will likely wipe out your trading account very quickly. Likewise, if you’re a beginner trading with a 1:1000 leverage, you’re more likely to lose everything. Using the above risk-management strategies (and others) will help you to avoid losing all your money as it provides a cushion against losses.

Finally, know that you shouldn’t base your risk-management plan from this article alone. Do more research online and read about the ways that other traders minimize their risks. You’ll need to read about stop-loss orders, trailing stops, and so. Don’t make the mistake of using leverage that is too high, never risk more than a small percentage on any one trade, and be sure to do more thorough research to help with your strategy and other risk-management precautions.

Categories
Forex Forex Psychology

The Psychology Behind Fear in Forex Trading

Trading psychology studies the ways that one’s emotions can affect their trading habits. From excitement and greed to fear and anxiety, emotions can wreak havoc on our results if we let them. Here are a few examples of ways that emotion can interfere with your trades: A trader experiencing crippling anxiety, also known as analysis […]

Trading psychology studies the ways that one’s emotions can affect their trading habits. From excitement and greed to fear and anxiety, emotions can wreak havoc on our results if we let them. Here are a few examples of ways that emotion can interfere with your trades: A trader experiencing crippling anxiety, also known as analysis […]

Trading psychology studies the ways that one’s emotions can affect their trading habits. From excitement and greed to fear and anxiety, emotions can wreak havoc on our results if we let them. Here are a few examples of ways that emotion can interfere with your trades:

A trader experiencing crippling anxiety, also known as analysis paralysis, enters trades too late or fails to enter a winning trade altogether, even though they knew it was a good move.

A trader that is excited might fail to exit a trade when they should because they are feeling lucky. This could cause the trader to stay in the trade for too long.

A trader that is feeling greedy might want to make every cent possible and could stay in the trade past their take profit goal. Otherwise, the trader might close out the trade after incurring a very small loss because they don’t want to lose anything more.

While all of these problems can cause serious problems, fear is probably one of the worst emotions that traders can experience. Fear causes us to doubt ourselves and our capabilities. Have you ever allowed fear to interfere with one of your trades? If not, then think of the following ways that fear may have played a role in a bad decision you’ve made:

Have you ever failed to enter a trade even though you knew it was a good move?

Have you ever experienced a series of losses that almost made you feel paralyzed to make another trade? Did you feel as though trading was riskier than normal or your luck was bad?

Has the thought of losing money ever stopped you from making a move that you knew you should make?

Have you ever exited a trade too early because you feared the market would move in the other direction, only to watch that trade go on to be a winner?

If you answered yes to any of the above, then chances are that fear has in fact affected you while trading. There are several reasons that could cause a trader to feel fearful. Losing money is perhaps the most prevalent. After all, it takes hard work to make that money and the thought of losing even some of it is scary. Some fear failure altogether and cannot stand the idea of wiping out their account and failing as a trader. Making a mistake, failure, and other personal issues can tie in with trading because of the uncertainty of it all. Then, anxious traders might also doubt their abilities and overthink their strategy even when it’s a solid one. There are many different factors that can cause fear in a trader, and all of them have to do with the way that person thinks in general and while under pressure.

The first step to solving this problem is realizing that it is affecting you. If you’re reading our article, you’re likely already aware that fear is interfering with your trades. Fear is a powerful emotion that clouds our judgment, but there are ways to stop it from hurting your trades.

If you’re experiencing both fear and anxiety, then you likely have a common problem known as analysis paralysis. Traders experiencing this are like deer caught in headlights. They can’t decide in time, so they either enter trades way too late, or they fail to enter them at all because they cannot make up their mind.

There are ways to overcome this, however. Many suffering from this problem of overanalyzed data. They might use too many indicators, for example. Simplifying the number of indicators you’re using or even trading without them are good ideas if you have a ton of indicators running at once. Having a good trading strategy is another measure you can take to overcome the fear and anxiety behind analysis paralysis. Or you can take other measures, like meditation or yoga, music, or another relaxation technique to help calm yourself. There are lots of resources online related to this problem and how to manage it.

Once you’re aware of the ways that fear is affecting you, you can figure out how to use it to your advantage. Understand that highly driven people are usually driven by fear. If you don’t want to fail, then why not put forth every effort to be the best trader you can be? Instead of being paralyzed by fear, you should let it inspire you to do better. Learn more, perfect your trading strategy, figure out the best ways to analyze data, and so on. Embracing your fear can help you to use it to your advantage.

Every trader should know that fear is an understandable emotion that can stem from several different places when one is trading. Whether you’re fearing failure, worried about losing money, or something else, the first step is identifying where this emotion is coming from. Once you’ve done that, you can work on getting better. You might not be able to get rid of your fear entirely, but there are ways that one can use it to their advantage and continue on to trading success. If you’re suffering from analysis paralysis, then there are actually several different methods that might help you overcome that. At the end of the day, every trader needs to know that fear doesn’t have to interfere with their trades or bring an end to their trading career as long as they learn how to manage it.

Categories
Beginners Forex Education Forex Money Management

Seven Trading Secrets that Most Successful Traders Won’t Share

1. Keep an Open Mind In the world of forex trading, nothing is ever guaranteed. Successful traders don’t think in terms of absolutes or in “if/then” statements. Instead, you should think of words like “likely” or “probably”. Always remember that there is no accurate way to predict what is going to happen and that no […]

1. Keep an Open Mind In the world of forex trading, nothing is ever guaranteed. Successful traders don’t think in terms of absolutes or in “if/then” statements. Instead, you should think of words like “likely” or “probably”. Always remember that there is no accurate way to predict what is going to happen and that no […]

1. Keep an Open Mind

In the world of forex trading, nothing is ever guaranteed. Successful traders don’t think in terms of absolutes or in “if/then” statements. Instead, you should think of words like “likely” or “probably”. Always remember that there is no accurate way to predict what is going to happen and that no matter how sure you are about the ways things will go, you should never feel too certain. Those that fall into confidence often make mistakes when it comes to overtrading or make hasty decisions because they believe they know exactly what will happen. Imagine losing a great deal of money because of this issue.

2. Stop Focusing on Making Money!

Traders that start out with dollar signs in their eyes are only setting themselves up for failure. Of course, you might be wondering “what’s the point?” if it isn’t making money. Your goals as a forex trader shouldn’t be to make a certain amount of money, but rather to make more than what you’ve lost. If that equates to a $5 profit in a one-month period, you’re doing better than many others that have tried. Creating a solid trading plan and perfecting your strategy is another notable goal that directly affects your success and profits later down the road. Instead, try to mold yourself into the best trader you can be, and you will reap the benefits in the end.

3. It’s Better to Risk Less

It might seem like taking a bigger risk is the better option, as it can result in a larger reward. However, the opposite is true. If you only risk around 1% or slightly more on each trade, then it will be much harder to drain your trading account if the market moves against you. It will take longer for your profits to build up, but you won’t lose everything in one sweep either. Trust us, we’ve heard horror stories of traders losing hundreds of thousands of dollars on one trade.

4. Boring is Normal

You might have a concept in your head about what trading is like from watching movies and tv shows that depict traders on Wall Street running around, jumping, yelling, and so on. In reality, those that choose to trade from home use devices like laptops and phones, often trading in solitude and watching the market for something to happen. Overall, it can be quite boring, as you’ll spend a lot of time watching your computer screen. A quick tip if you can’t handle sitting on your hands for hours – consider investing in an automated forex robot so that you won’t have to.

5. Know that your Win Rate isn’t Important

A trader’s win rate is one of the most talked-about figures when it comes to trading. This seems to make sense, as you want to win more than you lose, therefore, a higher win rate should seemingly indicate success. This isn’t true, however. What really matters is making more money than you lose. If you have a higher win rate with profits then that’s great, but you could still wind up coming out on top with a higher loss rate as well. Instead, simply compare your profits vs losses.

6. Decide How Much Money you Want to Lose on a Trade, Not the Percentage

Traders typically base their risk tolerance on a percentage of their account balance. For example, you might risk 2% of your account balance on any single trade. This is recommended by experts, but you might not want to base every single move on the same percentage. Instead, it is recommended to decide how much you are actually willing to lose on each trade down to the dollar amount. That amount might actually be higher or lower than a predetermined percentage.

7. Remain Neutral

Obviously, nobody wants to lose their hard-earned money when trading. Unfortunately, this is an inevitable part of trading that is bound to happen from time to time. If you find yourself hoping and crossing your fingers that your trade will be a winner, you might be setting yourself up for disappointment. The best traders have learned how to be neutral and don’t allow losses to break their spirits because it is a simple part of trading.

Categories
Forex Economic Indicators

Tips for Trading During the Coronavirus Pandemic

Anytime a global crisis happens, investors tend to panic and start selling. Although it might seem like a bad idea to invest when things are so crazy, the market actually sees growth after the dips that are caused by the actions of fear-stricken investors. Pandemics and global disasters can actually present trading opportunities, as long […]

Anytime a global crisis happens, investors tend to panic and start selling. Although it might seem like a bad idea to invest when things are so crazy, the market actually sees growth after the dips that are caused by the actions of fear-stricken investors. Pandemics and global disasters can actually present trading opportunities, as long […]

Anytime a global crisis happens, investors tend to panic and start selling. Although it might seem like a bad idea to invest when things are so crazy, the market actually sees growth after the dips that are caused by the actions of fear-stricken investors. Pandemics and global disasters can actually present trading opportunities, as long as one reacts properly. Below, we will provide a few tips that can help traders make it through this pandemic on top.

Tip #1: Don’t Panic!

Pandemics are generally known for causing hysteria. The COVID-19 pandemic itself has been known to cause shortages of food and other essential items due to hording. Many people might have seen the ways that this type of panic has carried over to the stock market. For example, you might see a drop in your investments and quickly sell out your assets out of fear. Remember that selling everything and being terrified of the stock market is caused by your emotions, and that making financial decisions out of fear will cause you to make mistakes. Instead, try to focus on long-term goals and watch for bearish opportunities as the market recovers.

Tip #2: Take Advantage of the Market

During times like these, the value of stocks will go down. This makes it a good time to invest in stock for good companies while the price is down before the price goes back up. You won’t see many opportunities like these, and prices will eventually go back to normal. Just be careful, as shares in bad companies might stay down, so you’ll need to be mindful of the companies you’re investing in. Think about the fact that others are thinking from fear and anxiety and anticipate the way the market will move.

Tip #3: Consider Diversifying your Portfolio

You should be mindful of what you invest in during times of global pandemic, but it might be a worthwhile idea to invest in different resources. If you typically invest in currency pairs, consider adding commodities to the list. Having your money in different places can help to cushion the blow if one of those investments goes bad, so it’s better to have different options.

Tip #4: Be Mindful of Risks

Traders should always take precautions to limit their losses, especially during times of pandemic and hysteria. Of course, you will need to be even more careful right now. Make sure you’re using a stop loss and consider setting take profit levels or other measures to ensure that you don’t blow your account. Take another look at your trading strategy as well and look for any needed changes. You don’t need to change everything out of fear, just simply look at the way the pandemic has affected your profits thus far and see if there is anything that needs to be changed. If you don’t already keep a trading journal, consider keeping a special one until the pandemic passes so that you can keep a close eye on the ways that it is affecting your outcomes.

Tip #5: Look Towards the Future

There are a lot of reasons why COVID-19 has inspired panic, not only in traders but in all of us because of how dangerous it is and how it can affect our lives. If you haven’t found yourself doing much trading because you have too much on your mind, or if you’re feeling too anxious to trade, remember that this will pass. All of the previous pandemics have ended at some point. Try to profit from it by anticipating what the market will do but understand that it is ok to take a break from trading if your head isn’t in the game. Things will eventually go back to normal.

Final Thoughts

The COVID-19 has caused many investors to sell and take profits out of fear and anxiety. Good investors need to understand how times of crisis affect the market and make smart trading moves while practicing risk-management techniques to limit their losses. To make effective trading decisions during any times of market uncertainty, one needs to be able to handle their emotions, otherwise, they are bound to make bad trading decisions. Don’t panic and remember that this pandemic will pass, and the market will go back to normal before we know it.

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Beginners Forex Education Forex Basics

Accept It, There Is No Holy Grail In Trading

The Forex markets are its own beast, many traders will say that at times, it just does what it wants with no real reason behind it. It is also something that can be influenced by the big banks (to a degree) so why are we still looking for what we would call the Holy Grail? […]

The Forex markets are its own beast, many traders will say that at times, it just does what it wants with no real reason behind it. It is also something that can be influenced by the big banks (to a degree) so why are we still looking for what we would call the Holy Grail? […]

The Forex markets are its own beast, many traders will say that at times, it just does what it wants with no real reason behind it. It is also something that can be influenced by the big banks (to a degree) so why are we still looking for what we would call the Holy Grail? If something cannot be tamed, if its conditions cannot always be mastered, then would such a thing actually exist?

The short answer to those questions is no. It does not exist and it never will exist. A huge part of trading is losing and any profitable trader will tell you that they still make plenty of losses, their strategy just allows for it and they make profits overall. So why can’t there be a holy grail of forex?

The market is uncertain and unpredictable. The markets are fluid, they are prediction and there are thousands of factors that come into play that can cause it to shift up or down. A human mind is an incredible tool, but even that will struggle to take into account and calculate the thousands of variables that come into play when looking at the markets. Unless you are told by a major bank what will happen (which is illegal), you won’t be able to predict certain events such as economic news events and certainly not natural or man-made disasters. So, the mind cant do it, why cant a computer? People have tried to create robots in order to trade, but again, the computing power and the number of information sources needed would involve a lot of computing power, not to mention that even the robot won’t be able to predict the aforementioned news events and disasters that often rock the markets.

And then there are market influencers. The markets are full of thousands if not millions of people trading, and due to this, they have control over the movements in the markets. So this doesn’t necessarily mean that humans are deciding where the markets will go to, but we are certainly influencing it in ways which according to data would seem unnatural. There have been times where the data has been incredible negative, all signs points to a fall in price, however, the markets continue to rise, against all the available data. This is simply because the traders in the markets are still buying, of course it should eventually come down, but due to its nature, this is unpredictable and no one can say exactly when it would.

A strategy cannot be profitable in all scenarios.The reason there are so many strategies out there is that no one strategy can be successful in all situations if there was one, then it would be the only strategy being used, and unfortunately, that would completely kill the markets and they would be at a standstill as everyone is using the exact same strategy. Patterns often repeat themselves over time, the markets can be seen as cyclical which is only broken by huge events. Most strategies that we know work for certain patterns in the markets, as soon as it shifts to another the strategy no longer functions to its fullest and so adaptations or completely new strategies will be needed for the new pattern that is forming.

So while there is no holy grail to trading, no way to be 100% profitable and no way to always win, it doesn’t mean that you cant be a profitable trader overall, the losses are part of trading, adapting strategies and having multiple at hand is the key, but also knowing when not to trade. Control your risk, protect your account and whatever the markets are doing, you will be able to profit in them.

Categories
Forex Psychology

Tips for Coping with Trader’s Frustration

When trading, frustrations come with the territory, it is an inevitable part of trading and something that every single trader will experience at some time during their trading career. The problem with frustration is that it can lead to further feelings of not being good enough or wanting to not bother anymore, it can also […]

When trading, frustrations come with the territory, it is an inevitable part of trading and something that every single trader will experience at some time during their trading career. The problem with frustration is that it can lead to further feelings of not being good enough or wanting to not bother anymore, it can also […]

When trading, frustrations come with the territory, it is an inevitable part of trading and something that every single trader will experience at some time during their trading career. The problem with frustration is that it can lead to further feelings of not being good enough or wanting to not bother anymore, it can also lead to you making mistakes and cutting corners, which is a cardinal sin when it comes to trading.

If you have been trading for a while, then I am sure that you are able to think back to a time when you started to feel frustrated when you did, did you stick with it or did you do something to try and reduce the amount of frustration that you are feeling? The good news is that there are a number of different things that you can do to help reduce the levels of frustration that you are feeling, some easy and some that take a little more effort. What is important is that you do something to reduce the feeling before you start to take shortcuts or make mistakes.

So let’s look at some of the things that you can do to help reduce your frustration levels.

It is not your fault: A lot of frustration often comes from a loss or a few losses in a row, when this happens it is perfectly reasonable for someone to begin to think that maybe it is them that is causing the losses, maybe you just aren’t good enough at this trading thing. What you need to remember so that it is not your fault and everyone experiences these losses. Losses are a part of trading, if you didn’t have any, then you would be one of the greatest traders who has ever traded, so when you experience a few, even if they are in a row, do not kick yourself. Remember back to when you created your trading plan and strategy, you calculated these losses to give you an overall profitable strategy, so when they come, it can be annoying, but it is not your fault.

Losses will happen, do not blame yourself, and just take a look at the trades to work out why it lost, there may be a logical explanation or a clear reason that shows you that it was not you, it was something that happened in the markets. If you are following your trading plan and sticking to the rules that you set, then there is nothing that you have done to merit any blame, so accept the loss and move on to the next trade.

Your strategy still works: When you make a couple of losses in a row, it can make you think that maybe your strategy is the thing that is not working. In reality, this is not the case. In fact, your strategy may still be working perfectly well. The markets are constantly changing, the conditions are changing minute by minute, your strategy will not pick out trades perfectly, no single strategy ever will. So a few losses here and there is part of the process, your strategy was designed to be able to cope with this. Stick with it.

If you are convinced that there is definitely something wrong with your strategy, do not start over, take a closer look at each aspect of your strategy, the majority of it will still be absolutely fine, no reason to start over completely. Just alter any parts that you feel need adapting to the new trading conditions, but your strategy ultimately still works, so do not throw it out for something completely new and untested.

Work out what went wrong: If you have had a few losses, do not start to feel frustrated, it is difficult as it is a natural feeling to have, but instead, try working out why things went wrong. Hopefully, you are keeping a trading journal where you are putting in all the trades that you are making as well as the reasons behind making them. Looking at this, you may be able to see whether you did something wrong or if you missed a part of it. It can also show you if there are any patterns in your trading which could have caused the losses.

If you manage to find something, then this is the perfect time to make some changes, just adjust the little bit that you feel caused the issue, then test it out on a demo account, see whether it has made any differences, if it works, change it on the live account, if not, then revert back and continue with your strategy. If however, you find no patterns and nothing really wrong, then it could just be the part of your strategy where you will have losses, it will always happen, try not to overthink it too much, and carry on with what you are doing.

Take a break and get outside: So you have become frustrated, either from a few losses or the lack of trading opportunities, instead of letting that frustration grow, try and get away from it completely. Get outside and get some fresh air, this is a fantastic way to clear your mind, being able to reduce your frustration levels with a good walk, or by doing something completely different like shopping with help take the negative thoughts out of your mind. Coming back to trading with a fresh and clear mind will allow you to look at the markets in a new way, your past losses will mean nothing and you will be able to fully concentrate on your next upcoming trades.

Do some exercise: Exercise is one of the number one ways to get rid of both frustrations and also negative thoughts. Taking part in the exercise will release endorphins into your body which will very quickly help you rescue the frustrations that you are currently feeling. It does not need to be anything extremely tough, even a simple jog or a long walk is enough to help your body. Not only does it help clear your head, but exercise helps with your overall well being, both your mind and body. Having a healthier mind and body allows you to tolerate a lot more including those trading frustrations in the future and will help you to trade with a clearer mind.

So those are a few of the things that you can do to help with your frustration, it is important to remember that when something goes wrong, when you have a few losses, it does not mean that it was your fault. In fact, you may well have done absolutely nothing wrong. Being able to control those frustrations and to spot when you are starting to become a little frustrated is a very powerful tool, as soon as you see it coming, change something, do something else to help reduce or avoid it completely. Only you can tell when you are feeling frustrated, so it is up to you to be able to take that step back and do something about it. You will thank yourself later once you have managed to reduce those levels and you will be a far better trader if you learn to control it.

Categories
Beginners Forex Education Forex Market

Not Trading Well? Here’s Why You Don’t Blame The Markets…

It can be easy to blame the markets, in fact it is what a lot of people do, something goes wrong, it can’t be my fault, it must have been the markets moving against me. Sometimes it can look like the markets are purposely fighting against you, you set a stop loss, the markets just […]

It can be easy to blame the markets, in fact it is what a lot of people do, something goes wrong, it can’t be my fault, it must have been the markets moving against me. Sometimes it can look like the markets are purposely fighting against you, you set a stop loss, the markets just […]

It can be easy to blame the markets, in fact it is what a lot of people do, something goes wrong, it can’t be my fault, it must have been the markets moving against me. Sometimes it can look like the markets are purposely fighting against you, you set a stop loss, the markets just about touch it and then shoot off in the other diffraction, everyone has experienced it, but did it know you were there?

In short, no. When you look at the big picture, it isn’t nice to hear, but you are so insignificant in the overall scheme of things when it comes to the value of your account, that even if the markets or the big fish could see you, they most likely would not even blink in your direction.

When the markets move, they are moving in the direction that thousands and thousands of traders are going, this isn’t just small fry like yourself, this includes those huge organisations and institutions that are moving billions of currency around. Just because you put on a 0.05 lot trade, doesn’t scare them, it won’t make them want to pull back to catch you out, it just isn’t something that they would spend their time or money on doing.

So if it is not the markets that are moving against you, what could it be? Could it in fact be you? The answer is most likely yes. This does not, however, mean that you are a bad trader or that you did something wrong, it just means that the timing may have been wrong, or the markets decided to move before hitting your take profit levels, these things happen and they are a part of trading, a part that will never go away.

There are a lot of things that can cause this, when you look back at your trading journal and your strategy, maybe a part of it was not followed properly, often when trading to a plan, if just a single rule is broker it can break the integrity of the trade and will make it far more likely to lose than win. Maybe you got distracted and ignored a signal that you would normally take into account. Sometimes, the conditions of the markets change and so they are no longer favourable to your current strategy and something ends up being adapted.

All of these things can lead to that loss and they are far more likely than the markets looking at your trade and wanting to take you out.

So we have worked out that it is most likely something that you have done or not done which has caused the loss rather than the markets being out to get you. So now we know that, what can we do about it? There are actually a few easy solutions, they won’t give you a 100% win rate, but they will help you to adapt to the changes that are taking place.

Double-check your strategy, maybe there is something in there that isn’t quite working properly. More often than not a trading plan is pretty in-depth, the more information in it, the more information that can be lost or misunderstood. One thing you can do if it is quite convoluted is to try and scale it down, take out the bits that do not really do anything so it is a lot clearer and far easier to follow for each trade.

Have the market conditions changed? Maybe the strategy that you were using for the past three months is no longer as effective as it used to be due to a change in the overall market conditions or sentiment. If this is the case, then you need to be able to see where your strategy is no longer effective and you need to change something. Being able to adapt your strategy is what will keep it profitable for a lot longer than just leaving it as it is, it will need constant adjustments to ensure that you are on top of this at all times.

Double-check the markets, sometimes, especially if you have been working long shifts, you can miss things in the markets, maybe there was something obvious but because you are tired you missed it. Or if the market conditions have changed, so will the patterns on the charts. If they have changed then the charts may now be showing and saying something completely different to what they did last night, make sure you double-check to see whether it has changed and then adapt your strategy to whatever those changes are. If you did miss something, then make a note of it, it will help you to always remember to check it in the future.

As a trader, there will be times when the markets look like they did something just to spite you, it is important to remember that the markets are like the sea, they do not care about a single drop of rain, however, a thunderstorm can make a lot of movements. So when the markets are moving, you as an individual is not important, it won’t move to just get you, it will move the way that the storm is blowing, if you just happen to be against it or in the wrong place, it won’t discriminate, it will take you out.

All that you can do is prepare yourself, there will be losses, there will be wins, constantly adapt to the changing markets and you will be able to be a more successful trader.

Categories
Forex Risk Management

Finding Your Own Personal Risk Reward Ratio

Risk and reward, how much you are willing to risk to win how much? We ask ourselves this sort of question every day in life. Often it is not something so obvious, taking the risk of crossing the road, there is a risk of getting hit and the reward is getting to the other side, the risks are actually pretty large, getting hit could be devastating, but we do things to help reduce the risks such as looking each way or only crossing at a designated crossing area. We need to make these decisions in trading too, but the outcomes are often much more complicated and so is the decision-making process that we use.

Risk and reward, how much you are willing to risk to win how much? We ask ourselves this sort of question every day in life. Often it is not something so obvious, taking the risk of crossing the road, there is a risk of getting hit and the reward is getting to the other side, the risks are actually pretty large, getting hit could be devastating, but we do things to help reduce the risks such as looking each way or only crossing at a designated crossing area. We need to make these decisions in trading too, but the outcomes are often much more complicated and so is the decision-making process that we use.

Risk and reward, how much you are willing to risk to win how much? We ask ourselves this sort of question every day in life. Often it is not something so obvious, taking the risk of crossing the road, there is a risk of getting hit and the reward is getting to the other side, the risks are actually pretty large, getting hit could be devastating, but we do things to help reduce the risks such as looking each way or only crossing at a designated crossing area. We need to make these decisions in trading too, but the outcomes are often much more complicated and so is the decision-making process that we use.

If I was to offer you a 50/50 choice, the markets go up or the markets go down, you will win $10 if correct and lose it if wrong, the markets are random at this point, would you take it? The majority of people would actually say no. So let’s change it up a bit, it was the same 50/50 decision, but this time you will win $20 or lose $10, it’s a bit better but many would still say no. So what about winning $50 or losing $10, for a 50/50 chance the possible outcome of winning an additional $50 is looking quite tempting. So when you take that chance, in reality, it is beneficial to yourself to take the bet when the outcomes are that you can lose $10 but win $10.01, as the monetary value would be in your favour, but the majority of people would not take it.

So let’s change it up a bit, let’s suggest that there are some additional probabilities, you can work them out and it is now a 75/25 percent chance that the markets will go up. At what point would you consider making the same bet, would you do it for the $10/$10 or the $20/$10? This is more in line with how the forex markets work, we are able to limit our loss with a stop loss, but the take profits are where we need to consider how we place our trades.

So let’s assume that we are making a few trades, we are planning to risk 1$ of our account on each trade, with a $1000 account that means that we will be risking $10 per trade. Would you want to risk that $10 for another $10, probably not, many traders aim for a 2:1 ratio. So for every win, they will get twice the amount back that they risked. Some traders like to increase it further, so 3:1 which means that they only need one win out of three trades to be in profit, sounds good, so let’s go higher. A 1:5 ratio means that you can be in profit if just 1 in 5 trades win, however with the reward part being so high, it means that the markets will need to move a lot, and there is a far greater chance of a reversal.

It all comes down to personal choice, if we take a look at a lot of the more popular strategies out there, are they getting a 50% win rate, a lot of them actually aren’t, many are hitting 40% or 30% which may seem quite low, however having a risk/reward ratio of 1:30 means that all of those strategies are actually in profit. Then again, there are those that go even lower, seeing people with a risk-reward ratio of 0.4:1 which means that they would require a win rate of 71%, which is pretty easy right? Not something we would recommend.

It is important to find the ratio that works for you, it will be based on a couple of things, firstly your actual strategy, different strategies will work with different a different ratio, you will also need to take your own risk profile into consideration, if you hate risk then you probably want to go a little higher, but it is entirely up to you. It may take you some time to get used to a certain ratio.

Once you do find the ratio that works for you, it is important to stick with it, do not jump around different ratios, this will only cause issues with your overall results. Keep looking and eventually, you will find the risk-reward ratio that is right for you.

Categories
Beginners Forex Education Forex Basics

Where to Direct Your Focus During a Losing Streak

People do not like to think about losses, the problem with that is that losses are a major part of trading, they will happen. There is no one strategy out there that is loss proof and you will experience them, you will even experience losing streaks of 2,3 or even more losses in a row, […]

People do not like to think about losses, the problem with that is that losses are a major part of trading, they will happen. There is no one strategy out there that is loss proof and you will experience them, you will even experience losing streaks of 2,3 or even more losses in a row, […]

People do not like to think about losses, the problem with that is that losses are a major part of trading, they will happen. There is no one strategy out there that is loss proof and you will experience them, you will even experience losing streaks of 2,3 or even more losses in a row, this is a part of trading, this does not mean however that you won’t be profitable or successful.

There are a number of different things that you need to think about when you take a loss, some of them will have you questioning your strategy, others your abilities, but thinking about these things will enable you to better understand why you had a loss, or even multiple losses in a row and will enable you to better understand what it is that you need to do in the future to hopefully reduce the risk of having another loss for the same reason. If you are having multiple different losing streaks, then there is probably something that needs changing, not necessarily a major change, just a small tweak could be enough to remove those streaks from your future,

Are there patterns in your trading journal?

When you started out at trading, most places would have told you to keep a trading journal, the entire purpose of the journal is to help you out in this exact situation. As you would have been writing down your entries, exits, reasons for the trade, and anything else that you can think of, you can use this to help look for correlations between your losses and any potential differences that there may be to the wins. It is able to highlight mistakes that you may be making and will allow you to see this and then adapt your future trades to hopefully avoid making them again in the future.

If you are not using a trading journal, start using one, it is the only way to truly understand what your trading habits are and whether there are any similarities when you take a loss, it will allow you to focus on something that is clearly causing you to make a loss and will ultimately make your trading lot more transparent and easy to analyse. Use it and review it, make sure that you also note down any changes that you ake due to the losses, as you need to know exactly what you did and the effect that it had, this was if it works you can continue to use it and if it does not work, there is a record of trying it and the result of the change, so you can avoid trying it again in the near future.

Do you have a trading system?

This may seem like a silly question to you, why would we be trading if we did not have a proper strategy? You would be surprised how many people actually do this, it is mainly done by those that are either new to the trading game or those that have kind of given up and are now just simply gambling and hoping. You need to look back over what you do and what your plan says. Does it have specific entry requirements? Does it have proper risk management on those trades? Does it take losses into account in regards to overall profitability? These are some of the questions that you may need to ask yourself about your trading strategy.

The importance of ensuring that your strategy is complete is vital. The trading system is designed to give you your trading rules and your risk management and is overall designed to help keep you profitable overall and over a long period of time. If you trade without a system, it will only lead to losses, you may get a win here and there from a little bit of luck, but your overall results and your overall account will be in danger and we can be pretty sure that you will end up in the pile of the majority of traders who have tried and failed without a proper strategy in place.

Is your risk managed properly?

Risk, the voodoo word in trading, if you have got your risk management all set up correctly, then you will be able to survive a number of losses, hopefully, a lot of them if set up correctly. You need to think about how each of the losses is affecting your strategy, how much of your account is at risk with each trade? How much is the overall daily loss that you will allow? How Many losses in a row can your strategy sustain with your current leverage and margin levels? These are things that you will need to ask yourself if any of the answers concern you, then there may be something that you need to change.

Risk management needs to be one of the things that need to remain consistent throughout our trading, as soon as you change it, it can result in larger and more damaging losses. This does not mean that it can never change though, it just means that any changes that you make you will need to ensure that the change is there consistently for all future trades. Remember, the risk management plan is there to protect you and your account, ensure it is sorted before you start to trade for real and also make sure that it suits your strategy, there is no point trading with real money without one of these sets in place.

Classic Trading Mistakes

There are a number of different mistakes that people class as the classic trading mistakes, these include things like trading without a journal (we mentioned this above), not using stop losses or take profit levels, revenge trading, letting losers run and having some unrealistic expectations about what you want to achieve and how you will achieve them. These are all things that can lead to losses and will be far more common than you may think.

We would not be surprised if you had made one or more of these mistakes and unfortunately they can very easily lead to losses being main and then sustained. You need to be able to notice when you are making these errors and then correct them, but simply not doing it, that may not seem helpful but it is the truth, you just need to stop. Get your plan, journal, and risk management in place and trade using that, these will help you to avoid a lot of the mistakes that people often make.

The Wrong Expectations

Coming into trading with an unrealistic expectation can have some pretty bad effects on your trading and also the results that it brings. If you set your expectations too high then there is a much higher chance that you will over leverage or over risk your account which can have some very dangerous results, if you set them too low then you won’t see much difference or increase to your account balances. You need to ensure that you have got them set at the right level for both you and the strategy that you have been creating, this enables you to trade at a much more consistent level and you will also see some consistent results.

Is trading right for you?

Let’s be honest here, trading is not for everyone. Some people do not like the stress, others do not like how long it takes to actually become successful, others just simply don’t like the numbers involved in it or the risks that you need to take. There is nothing wrong with this at all, not every activity or job is right for everyone, some people will like it and others will not. If you find that you are getting bored or easily distracted then this is probably not the right thing for you. Having said that, it can also grow on you, give it a couple of months, if after those two months you are still bored or not really looking forward to your next day of trading then you may want to start looking for something else to do with your time as this may not be right for you.

So those are a few of the things that you need to think about when you are making some losses, it can be very easy to get swept up in the anxiety and stress that comes with a loss, but with the right things in place a loss is simply just another step in your trading journey, ask yourself these things, look at your journal to find those connections and work on getting rid of them. Use each loss as a learning experience and you will become a much better and much more consistent trader.

Categories
Beginners Forex Education Forex Basics

The Most Harmful & Potentially Costly Forex Trading Myths

As with anything in life, there are a number of different myths that have been created around trading, the thing about myths is that they are not real. A myth is defined as “a traditional story, especially one concerning the early history of a people or explaining a natural or social phenomenon, and typically involving […]

As with anything in life, there are a number of different myths that have been created around trading, the thing about myths is that they are not real. A myth is defined as “a traditional story, especially one concerning the early history of a people or explaining a natural or social phenomenon, and typically involving […]

As with anything in life, there are a number of different myths that have been created around trading, the thing about myths is that they are not real. A myth is defined as “a traditional story, especially one concerning the early history of a people or explaining a natural or social phenomenon, and typically involving supernatural beings or events.”

When it comes to trading there are a lot of them, in fact, there are too many for us to actually go through, but we have looked at a number of them, some you may have heard of or even been told personally, some you may have never heard before, what is important to understand is that these are myths and so they are not actually real, there may be a little truth behind them, but overall they are things that have been made up by someone at some point in time-based on what they see but do not fully understand. So let’s take a look at what some of the myths are.

Trading is Gambling

Trading is gambling, something that you have probably been told quite a few times, this is normally said by those that do not actually have an understanding of how trading works. We can certainly see from the outside why it may look like trading, without having knowledge of how the markets work, it can look a little like it is random movements up and down. When you begin to learn a little more about it, you know that this is not the case, in fact, there are hundreds of aspects to trading that influence the markets, none of them come down to gambling. If you learn, you can spot the things that will cause it to move and can take out a lot of the potential for losses. Trading is based on probabilities and not guesswork.

With Enough Money I Will Be Safe

If you have $100 your account is always in danger, if I have $1,000,000 then my account will be a lot safer. If you are using 0.01 lots sizes on both accounts then yes, your account certainly will be safer, however, are you going to stick to trade sizes that low? The majority of trading strategies are based around risking a certain percentage of your account. If you are risking 1% of your account, for a $100 account this will be $1, for a $1,000,000 account this will be $10,000. You will be able to make the same amount of losses with either account before there is a margin call. (of course, leverage and margin will be slightly different but the idea remains the same). Having more money will not reduce the amount of risk that you are taking. Having a larger balance can allow you to trade with smaller lot sizes in comparison or to risk less 0.5% as an example, but if you stick to the strategies, then you will be risking the same amount, and having more is not necessarily safer.

More Leverage Means More Profits

If we are only looking at the positives, then technically this myth is true if you have higher leverage than you are able to make higher profits if things always go the right way, but what happens when they go the wrong way? If they go against you, you can also make much larger losses and it can potentially put your account in a lot of additional danger. Leverage is a tool to allow you to trade more, but it is something that you need to have an understanding of and to not go crazy with. If you choose an account with a maximum leverage of 1:2000 then you are massively over-leveraging your account and we would expect it to blow at some point as you will be trading far more than your account should be. You should be sticking to modest leverage that suits both your account size and the strategy that you are using.

What Goes Up Must Come Down

While technically true, the questions that need to be asked are when. Sometimes the markets seem to do what they want, everything indicates that it should turn but it just does not want to. The markets can remain on a trend for a much longer period of time than you will be able to remain solvent, the markets will be able to beat you, if you jump into a trade and simply hope that it will turn, you will be on a path to total losses, you need to know when to get out. Do not sit there and simply hope that it will turn, that could be a long way away.

More Indicators the Better

You have probably seen images where people have 100 different indicators on their charts, it looks a little bit of a mess, doesn’t it? It is a good idea to have a number of indicators, they should be ones specifically chosen that suit your strategy, 3 or 4 max should just about do it. As soon as you get into the territory of having 101 different indicators on your charts, you are simply making things too complicated, you cannot properly understand what all of them are saying, many will be contradicting each other and your chart will be a mess. Stick to just a few, too many is just too many, as soon as you start to get confused or it takes more than a few seconds to find and read one, that is too many.

Keep Trying and You Will Be Successful

With a lot of things in life, the more you do something the better you get at it. This is slightly true when it comes to trading, you may get better at what you are doing, the problem with this is that you will be doing the same thing and getting good at it regardless as to whether it is good or not. Trading is more about learning, and not simply doing. If something is not working, constantly doing it will just make you better at doing something wrong, you need to learn why things are not working in order to resolve it and improve. It is also important to note that time spent does not necessarily mean improvement, you could sit for hours in front of the charts and learn nothing, you need to organize and plan your time and learning if you want to be successful.

Emotions Are Your Worst Enemy

Emotions get a lot of bad sticks, you are often told to try and get rid of them when trading, for some this is certainly something that you need to be doing, but not all of them. Emotions are a way to show that you are normal, if you did not experience any stress then there may actually be a problem. You can actually harness things like stress as an indicator that you need to change something and potentially adapt your strategies.

Discipline Will Always Protect You

Discipline is vital when it comes to trading, but it is not something that will keep your account safe on its own. Discipline allows you to stick to your plan, it allows you to ensure that you maintain proper risk management. The problem is that being dedicated and disciplined to something that may not be working does not help you, it will just ensure that you continue to do the thing that is losing. You need to first ensure that you have a working strategy, one that can be consistently profitable, that is then the stage where you need to ensure that you are disciplined, but be sure that you also have the understanding that things will need to change at some point when the markets change, so do you.

There is a Holy Grail Strategy

You may have heard of the holy grail, the one strategy that is better than all the others, well we are sorry to tell you, that this holy grail strategy does not actually exist, if it did, there wouldn’t be hundreds of other strategies, there would be just the one. The markets always change, each trader has a different balance and economic events mean that no one strategy can be successful all the time. This is why it is often recommended that you learn a number of different strategies, as a way to be able to adapt when the markets do change. Do not simply rely on a single one and certainly do not go out there looking for the perfect strategy, you just won’t find it.

You Can Get Rich Quick

You have probably seen hundreds of posts all over whichever social media accounts you use, people promising to make you rich, bad news I am afraid, these are not real. You can actually get rich very quickly, the problem is that you have a 0.000001% chance of it happening. Trading is a very slow process, it can make you rich, but that will be 10s of years down the line, not overnight. Do not go into it thinking that you will be rich, you will overleverage your account and this will only lead to losses. Please, don’t listen to those saying they can make you rich, they cannot and will simply run off with your money.

Complex Strategies are Better than Simple Ones

Sometimes things can get a little too complicated, if you have a strategy that requires you to look at 3 different things or one that requires you to look at 20, people will often think that the more in-depth one will be better, but how long will it take you to look at all 20? And how long will it take you to look at 3? You are far more likely to be able to master the 3 point strategy and to always remember to do them all than you will the 20, when you make things too complex, things will be missed and it will take far too long to actually put on a trade. A strategy only needs to be as complex as it needs to be, do not over complicate them, it will only hinder your trading.

So those are some of the many myths that exist in trading, there are of course more, and there will be more created as time goes on, what is important is that you do not let any of them influence you, some are positive and some are negative, but stick to your own plan, take no notice of them and you will be in a much better position to become a successful trader.