Forex trading is hard. Anyone says otherwise either got incredibly lucky or had the work done for them. Here, we’re going to take a look at the most difficult problems associated with FX trading, and tell you exactly how to overcome them.
The fact is that the majority of people who try to trade the forex markets end up losing the money that they put in, the majority of traders fail. Then there are those that have had a successful month, this doesn’t mean that the next month is going to be profitable, in fact for the majority it won’t be. Trading is not easy, but it is incredibly rewarding.
We are going to be looking at what different parts of trading the majority of traders find the hardest and potential ways that you can help yourself get through those checkpoints. You may not find them all difficult, too many find other things difficult that others find easy, that is the thing with trading, each and every individual will have a different experience. So let’s take a look at some of the things that people find difficult when trading.
Choosing the Right Trading System
There are a lot of trading systems out there, hundreds, in fact, some are very similar to each other, however, others are incredibly different, being able to find the right one for you can be a daunting task. Many traders when starting out will decide to jump between a number of different strategies trying to find what works for you, there is nothing wrong with this. However, doing it too much and not giving each strategy enough time will mean that you will pretty much never find the strategy that works for you. There are a lot of reasons why a strategy may not work for you, it may require more money than you have, it may require higher leverages than your account has, you need to make sure that it matches what you have, which can be quite hard to find.
The other issue that people often come across is the fact that the most publicised strategies are either quite dangerous ones like the martingale strategy or strategies that have been marketed by so-called trading gurus as a marketing tool in order to try and get more people to sign up for their course. You will want to try and filter out these kinds of strategies, as they are often quite easy to get into and learn, but the results will leave a lot to desire. Do some research and take your time when deciding on your strategy.
Emotions can be a real killer when it comes to trading and they have caused a lot of people to blow their accounts. There are two main emotions that are the most important to try and control, there is greed and there is overconfidence. They often come from completely different things, greed from wanting more, and overconfidence from thinking that they know the markets and each decision that they make is simply right, whichever emotion you are feeling, you will want to try and suppress them and to not allow them to take over your trading.
This is of course much easier said than done, both of those emotions are incredibly powerful and can really affect your trading. Those that fall for greed will start to put on additional trades and larger, riskier trades than you would normally put on. People who are overconfident will start to put on trades without putting in the proper amount of analysis that your strategy normally demands, you may also start to put on larger trades which can add to the risk that your account is under.
It is not an easy thing to control those emotions either, the powerful ones, but it is important that you work out some things that you can do in order to help you get past them. Knowing what coping methods work for you is important, it may be as simple as getting out of the house for a few minutes, doing some online shopping, or talking to someone, whatever works for you, be sure that you are able to do it should you feel any of these emotions start to come up, just do not let them influence your trading, that will only lead to increased risks and the potential loss of your account.
Staying Motivated After Losses
Losses are not great, they make us feel a little crap and a little demotivated, they can even make us want to quit entirely, especially if they come after a lot of preparatory work. We need to have a way to keep ourselves motivated though. All traders, and we mean all traders will experience losses. In fact, some of the most successful traders of all time had losing months at the start. They still probably do, but the reason that they are successful is that they were able to motivate themselves afterward in order to keep going. Each loss should be a learning experience, learn from what you did wrong, motivate yourself to try again with your new-found knowledge and the results should be better. You need to remember that while losses can make us feel bad, they are just a stepping stone to better trading, so do not feel disheartened and try and push yourself to move on, do not let the loss start to make you doubt or even worse, do not let the emotions take over your trading, this will add risk and potentially further losses.
One of the hardest things to do in trading and forex is to be consistent, if we could all do it then we would all be rich by now. Many many traders have had a profitable month, which is great, but that is no guarantee that their next one or the one after that will be profitable and that is where things start to fall apart. Your strategy may work really well, but then when the condition of the market begins to change, your strategy may not be quite as effective as it was before. Without adapting it to the new market conditions, you will end up with a loss and your results and profitability will not be as consistent.
In order to remain consistent, you need to be able to adapt your strategy or to have multiple strategies available to you that you can jump between. That is however a lot of work and many people who have just had a profitable week or month will simply want to stick with that as it works, but as we discussed above, this will only lead to added risks when the markets do decide to change. Consistency is great. It just so happens to be one of the hardest things to be when it comes to forex and trading.
So those are some of the more difficult things when it comes to forex and trading, trading forex as a whole is pretty difficult, but if you are able to get around some of the things mentioned above then you will be in a good position for the future. Do not be hard on yourself if you fail at times, that is part of the learning process. Instead, use those losses and mistakes as a learning experience, that is what will allow you to get past them and to become a better trader.