Have you heard of the statistics of how many fail to make money in Forex? If so, you will probably know the figure is around 90% to 95%. That is a big number I know, however do not be scared, there are a number of reasons why and ways of avoiding this however firstly you need to assess yourself as a trader.
First of all let me make it clear, Forex makes money, however in order for it to do so you need to assess your number one weakness and that is YOU. I have been there myself, my account down by 30% and then 40% and it feels like it will never come back. This is totally a mindset.. Why? Because everyone that does forex as a way to make money finds this issue at some stage. Those that learn from these times make it and those that run away in fear generally fail overall.
Now is decision time, you either decide to take Forex seriously like another business and make money or you become like the other 90% to 95% out there and start blowing up your account.
Why Do So Many Fail?
The answer is really simple when we all think about it, we have three main enemies in forex. One being ourselves and the others being the broker and the marketers. This is the honesty session, i have nothing to sell you on this post what so ever. Your brokers job is to make money by you trading whether losing or winning. That is them in a nutshell, they want you to trade, trade and trade again so they can benefit overall. They may be a good broker however this is still so, they want money, that is there job. So how do they increase our trading overall? They do that by promoting indicators or some amazing ea or create websites selling systems. Do not be fooled by these, they are all trying to get you to trade in the wrong way.
Relying on indicators for trade reasons overall helps traders lose. It has been proven time and time again. They may work for a few weeks however at certain times they will continue to fail.
How Do I Know This?
Two reasons, 1 being i have been there myself, trying every indicator under the sun until finally i spent enough time discussing this same topic in an objective way with traders that do actually make millions from forex or stocks. From real traders. This is something that is often overlooked, like anything you need influence from only the best in whatever you want to do. And they all say the same thing, they don’t use stochastic’s or macd or ma’s or anything other than what they see on the chart. And why, you may ask? Because indicators indicate the past, it has already happened and price action indicates only what is happening now..
So what about the marketers? I reference them because about 90% of all forex marketers pump false results, claiming they are making ridiculous amounts of money and so forth, in return for you to spend money on there winning system. Let me tell you this, this is the biggest secret in trading, real successful traders do not charge fees for there trading services. Instead they are the quiet guy ( or girl ) on some forum helping those with easy to see price action setups. This is because they are already successful in this business.
I am not saying all sales pitches are bull, but i am saying most are okay.. I hope that does not offend anyone. If you are a successful trader and you do sell something just make sure you allow the customer to confirm your earnings as well. There are way too many phoneys out there posting screenshots of demo accounts and so forth claiming riches.
This is something all traders should be aware of when it comes to trading, the lagging tools that are available by brokers and also the marketers promoting some system junk based on these tools.
Lastly, now ask yourself, how many traders do you think use indicators? Could that be a number of around 90 to 95%? ( That would be my good guess on the subject. )
Above Image – An example of a trader in Etoro, as you will see the Trader Sizzle has increased his account size by over 5000% in 6 months. To sign up for Etoro.
Anyways back to the topic..
The other aspect traders need to be aware of is themselves. You are afraid of losing, as we all are. Let me tell ya, the brokers and the big players know this as well. They count on it and that is how they can easily take money from your trading account to theirs. There is however a solution to all this? And it is really simple that i have learned over the years. Learn to be brave. Risk that little bit more beyond where normal traders place there stop loss? Why you may ask? Because that is where the big players are aiming. Basically put, they are aiming for where most traders place there stop loss ( stop hunting ). Look over your trades which you lost last time. Did it just hit your stop loss and then turn around and go the way you wanted it to..? If the answer is yes, then you are falling for the oldest trick in the forex book and that is doing what everyone else is doing, so instead risk another 10 to 15 pips and see what happens.
Another aspect in trading is many love to pump there own belief of fear as well. Do not and i mean do not ever listen. There is way too many opinions in this game. Fear can cause you to close a trade which later on goes in profit? Fear causes people to buy with the news when the market is at a major resistance zone and then nothing happens. Fear causes traders to make bad decisions.Have you noticed this on any of your trades, if so you have fallen for another common enemy and that is you. Next time a trade does hit your stop loss ask yourself this, did the market turn around not long after that loss and if so why did you not risk that little more?
Try not to get too obsessed with risk either. Forex is about risking, its minimizing those risks that makes a good trader. This can be done in so many ways, hedging or using stop losses, the truth is each works if done properly, however like many would like you to believe as well is that hedging is wrong. The truth is that a lot the top gun traders hedge including banks when a trade goes the wrong way which does not happen often. And why, that is because this market is very liquid and it does have a tendency to turn around if even for a brief period. And if not in the worst case scenario the hedge contains that loss until the trader sees another good pattern forming allowing them to get out without loss of any type.This allows us to make money both ways am i right? We make money both selling and buying. Sometimes covering trades is part of what we need to do when we are wrong. However in some circumstances using a stop loss is what we need to do as well. It all depends on what the chart is saying really overall and it also depends on where the price of that market is as well.
I mean how often does history repeat itself in forex with the daily and weekly charts, how often does price hit a high where it was previously been say months prior and then drop again? The answer is that it happens time and time again over the years. And when it does not, price action generally indicates this as well by passing important resistance areas with ease.
Overview of Enemies in Trading
- The Broker And There Indicators
- Over Trading
- Over Confidence – It is an important trait to be confident but while be cautious at the same time..
So You Need To Be
- Brave – A good trader is always brave while at the same time allowing a little bit of fear so they will close trades at the right time. Hint: Always move your stop loss into break even ( or more ) as soon as a trade goes your way say 40 pips, that way you lock in profits quickly while allowing you to assess the market on that trade with no fear.
- Use Price Action and Market Flow to Buy and Sell in any currency
- Risk More sometimes to be different from the crowd. Avoid common stop loss areas. Institutions are aiming for these. Your stop loss really is losing you money so cut down your units that you are trading so you can risk more. When you are having a good week reward yourself with placing a higher unit trade if you so like. That way you are only risking your profit, not creating massive draw down.
- Have fear, but only enough so that you know when to close a trade when the market is changing when your trade is in profit.
- Using previous support and resistance for future possible analysis or market changes
- Able to think outside the box, we all have our styles of trading and so we need to develop our own method that works for us.
- Think of forex like a business and not a game. It is not luck that makes a good trader, it is skill, analysis and following what the market is doing.
- High Probability Trader only, do not ever trade for trading sakes.
- A thinker that thinks short term sometimes and long term on other occasions. Be realistic with profit targets and be flexible as well.
- Good at Money Management.
- Treating this business like it should be treated, like a business.
I am sure you can think of other ones as well. These are all the ones that got me out of my dangerous pattern as well. If this relates to you as well let me know your thoughts below. Also while you are here please share this post in the social networks as well.