In Forex trading, there are five common reasons traders lose money when developing and implementing their Forex trading strategy.
If you can avoid making these errors, you can enter the elite 5% of online Forex traders that make big consistent profits from the markets.
Heres the five common mistakes that you need to avoid when youre trading in the Forex markets.
1. They Work Hard but dont Work Smart
Many new online currency traders work hard - but they dont acquire the right Forex education.
FOREX trading attracts some of the cleverest people in the world - these traders are smart, and think that they can win simply because theyre clever.
Being too smart however, can be a bad trait to have in Forex trading.
A clever trader tends to see the market the way they want to see it - and they dont see the reality of how the market really is.
Do you want to make money or feel clever? The market wont accommodate both - so decide before you start trading.
If you want to make money, leave your ego behind, and simply focus on the main objective of Forex trading making money.
If you only focus on making money, youll out perform a clever trader with an ego, whos obsessed with beating the market.
2. They dont keep it Simple
As you can gather from point 1, being clever doesnt mean youll achieve success in online Forex trading. Not only should you leave your ego behind, you should also concentrate on trading using a simple system. Many Forex traders think the more complicated their system is, the more successful the system is likely to be however, this logic is incorrect.
Simple systems tend to be more robust than complicated systems, in the face of ever changing market conditions.
When developing your own Forex method, keep it simple - and youll have a better chance of making consistent Forex profits.
3. They dont accept Responsibility
When youre trading currencies, its tempting to follow a guru whose made money - or claims to have made money.
The Internet is full of Forex education you can buy for $100 or so - and they all claim itll make you rich - but this is not the reality of currency trading.
The only way to succeed is to rely on yourself no one else can give you success. If you cant take responsibility for your actions - dont trade in the currency markets.
4. Theyre too subjective
In Forex trading, most traders like to use technical analysis, and study Forex charts.
Studying charts can make you a lot of money - however you must be aware of the trap that many traders fall into - being too subjective.
Avoid methods that need a lot of subjective analysis, such as Elliot Wave and cycles instead use indicators that define trends.
Good indicators to use in conjunction with trend lines are:
Moving averages, and momentum oscillators - such as RSI, stochastics and Bollinger bands.
This will keep you disciplined, focused, and allow you to trade without your opinions and emotions getting in the way.
5. They lack Patience
Many traders get impatient when Forex trading, and want to achieve success too quickly.
They start trading using one method, get frustrated with it when it doesnt make money - and then switch to a different method. They then end up like a dog continually chasing its tail.
Bad periods are normally followed by good trading periods - and profits, (if youre using a soundly based Forex trading system) so you need to stick to your plan.
Stop changing systems and have the patience to follow your Forex signals with discipline.
The X Factor Your Trading Edge
Anyone thinking of getting involved in Forex trading should ask themselves this simple question: What advantage over the majority of unprofitable Forex traders do I have, that will make me big consistent profits?
This is your trading edge if you cant think what it is - you dont have one!
A trading edge is something that all successful traders have.
Now youve read this article, youll realize that getting an edge in Forex trading is not as complicated, or as hard as many traders think.
You simply need to work smart not hard, focus your Forex education in the right areas and youll give yourself the chance to achieve consistent profitability.
The good news is that anyone prepared to learn Forex trading the right way, can become consistent and profitable.
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