The world of foreign exchange (or forex or currency trading) has always been associated with windfall profits and easy money. However, this is not true as 80 to 90 percent of forex traders make no profit and end up losing all their money. Let’s get into some of the biggest and most common mistakes made by forex traders so they can be avoided and profits can be made on a consistent basis.
Before reading any further, it is important to note that forex trading is a financial market and there are no free “gifts or income” for everyone. Also, there is no such thing as the Holy Grail or Magic Formula and all traders can lose money, even the most experienced ones, because the forex market is extremely volatile. It really doesn’t matter how many forex books you’ve bought and read, it doesn’t matter how much time you’ve spent learning about forex charts, it all depends on your experience, knowledge, patience and how the market behaves. at a specific time.
If you want to be a successful trader, you really need to understand that you will win one day and lose the other day using the same trading strategy. However, a well formulated and clearly defined trading methodology can significantly increase your chances of making a profit and reduce your chances of losing money. Unless you have a solid trading strategy and stay disciplined with it, you will lose your money. Also, forex trading should never be influenced by emotions such as fear, overconfidence and revenge as these can greatly affect your chances of profiting and even surviving in the forex market.
Also, forex traders need to have realistic expectations of their traders and any hope of making billions overnight can only put the trader under great stress and lead to nothing worthwhile. Forex traders should only expect above average returns on their trades and should only take calculated risks. The best way is to trade only those trades that offer a 3:1 win-loss ratio. This means that the best trades are those that are backed by financial planning and focus more on being safe rather than betting on bad trades. On top of that, traders should always emphasize protective stops and define an exit point even before an entry point is established so that high standards of financial stability are created and managed at all times.