Most forex traders who come to the industry come with a poor mentality. Some hope that they will turn out to be overnight millionaires without learning so much. This is why most forex traders lose money and quit in the early months of their trading.
It takes about 3 to 5 years for anyone to graduate with any professional course which more often than not forms the basis of one’s lifetime career. For instance, statistics have it that only 1% of the labor force in Kenya earns Ksh.100,000 and above per month, 6% earn between Ksh 40,000-90,000 whereas 93% take home less than Ksh40,000. Mark you, these are professionals in their own field.
In retrospect, here you get a person who wants to learn Forex in 7 days or even one month, open a $100 or $200 live account, and be smiling all the way to the bank at the end of the month. Some even ask me, “How much do you think I will be making per month?” And this guy doesn’t even know what’s a pip.
Statistics have shown that 96% of retail traders lose money in Forex. ONLY 4% make money. And I totally agree with this fact. That’s why all Fx Brokers scrabble for new sign-ups because they know with the ‘help’ of the foolish majority in the Fx Market (96%), they (Fx brokers) will be making hundreds of thousands and millions from this group.
If you want to make Forex Trading a career, begin looking at it from the perspective of your profession. How long did it take you to effectively learn, model, and teach what you are doing to earn your livelihood?
However, Forex is very easy and enjoyable to learn. You only need dedication, avoid greed, over-expectations, and emotions, BUT above all, get the right knowledge. Any professional and experienced trader will agree with me that price is moved as a result of deliberate, logical decisions by the market makers (MM). The idea that price is a product of the emotional feeling of the various traders involved or of sentiment is misguided.
It costs about 10,000 lots to move the market by one pip. MMs can move prices at will retail traders do not. So for retail traders to be truly successful, they need to at least have a concept of this process so that they understand what is happening and why. Even better, to be able to identify the patterns and strategies that MMs use to play the game and to ‘piggyback’ with them rather than attempt to trade against them.
For example, if one institution places an order to buy $1,000,000,000 (10,000 contracts) of Euro for instance, then it would require 10,000 traders selling one contract each, 100,000 traders selling 0.1 contracts each or 1,000,000 traders selling .01 contracts each to balance these transactions.
Put another way, the same number of traders would be required to initiate a transaction at more or less the same time in the same direction to move the market.
In a nutshell, Forex Market has a pattern. It’s NOT a trial-and-error gambling technique. Professional traders don’t trade every day, every hour. If you are making money and losing it all, it’s because you don’t know when to trade, what to trade, and how to trade what’s supposed to be traded.
Forex trading is not as simple as buying or selling
Most traders when they come to the game think it’s just buying and selling. What they don’t realize is that you need to prepare yourself psychologically, have the right tools, and choose the right forex broker.
The following are the reasons why we always lose money
- There is no clear trading system– Each online trading system has its advantages and disadvantages.- When they lose money by that method, they go online to find new methods, and so on we will follow around always losing.
What do we need to do?– Define yourself a method, and test it on the demo.- Find its mistake and fix it.- Just focus on your method.- Loyal to that method- Can refer to the method I share here: Transaction method - Non-compliance with entry points, SL, and TP SL: Stop loss
TP: Take the profit you often make the mistake of thinking you’re right, so never put an SL that was a stupid mistake. You enter the order without discipline
What do we need to do?- Identify trading currency pairs.
– So we buy this pair but because the price goes a bit, we shall wait for the price to recover to the support area, combining the candlestick pattern and buying up.
– Locate SL in the support area below.
3. Too many orders.– You have more orders will be more profitable, what happens when all things lose? You will lose everything.
– The market never follows you.
– Even if you have good forex signals, nothing is absolutely 100%.
4. Greed and Fear
a) Greed: – At first, you can make a lot of money with forex for your luck, then you think making money with forex is easy and forget about its risks.
– Then you trade in large volumes with no forex knowledge, and the result you account fire.
– Then, you deposit and trade with psychology to retrieve the lost amount in larger volumes and you lose everything.
– You don’t learn knowledge and you think Forex is gambling.
b) Fear:- When you have entered the order have SL, and TP, 2 hours later, you check and see the market is against your order, but do not touch SL
– You fear losing more money and to close your losses thereafter you close a loss, the market goes back and touches your original take profit.
– Sometimes when you go online and you see that the signal is opposite to yours, you rush to cut a loss
What do we need to do?- Always follow what you set out.- Not greedy.- Master your thoughts
5. Do not accept losses.- Sometimes you have placed Stop Loss, but for some reason, you don’t accept that you lost money you unset SL and hope the price will come back, but the market doesn’t go your way.
– And you add orders with larger volumes wishing to make more money and without knowledge of it. Your failure begins.
6. Impatient and disciplined.– These are the two factors that determine your success.
– You do not have the patience to wait, with the thought of having to enter orders to make a profit, resulting in a negative amount of the order and you cut a loss.
– You don’t know to wait for the right time to place an order, you can use the candlestick pattern and the same support and resistance to do that.
– Do not obey your discipline.
-Do not find the cause of losses and blame the markets.