Forex trading
Forex trading is getting more and popular with each day, and rightly so, since it’s such an unexplored part of the financial world for the average individual, or the r retail trader. Although forex offers great potential to anyone with the right attitude and background, it can and does lead to unfortunate results for some people who neglect their education and have misconceptions and too high expectations from the market. In this article we’ll take a look at five of the most common mistakes.
1. Overconfidence
Many traders have a strong opinion about their own capabilities, and are optimistic individuals with a well-developed conception of where they should be in society. Although this attitude is useful in most cases, traders tend to exaggerate their importance and prowess which then results in overconfidence, and a false sense of self-sufficiency at an early stage, even at the beginning. The market has no mercy on flashy egos, and sadly enough, these otherwise amiable individuals get beaten up rather severely when faced with the stark realities of the trading world.
2. Lack of Discipline, planning and consistency
Trading requires routines, and a systematic approach. The strategy and technique that you employ are of far less importance than how you employ them. No technical method will result in a consistent record of successes, but any method can eventually be refined to yield successful results with proper money management methods. In other words, consistency and discipline are far more important in trading than genius or creativity.
3. Rash Choice of Broker
Many traders give far less value to this important stage of a career. The broker can make or break your life as a trader, so make sure that you examine it thoroughly before you commit a penny to his custody.
4. Unrealistic Expectations
Even forex does lead to overnight riches for a few people who are statistical aberrations, those riches are almost always erased a short while later as a result of the same processes that created them. A successful trader aims at steady, yet modest profits, and never large ones. Our aim is to ensure that our losses are small. The first task is survival, and everything else is secondary.
5. Lack of Knowledge
You can’t succeed in forex without education. Education is a necessity for just about anything in this day and age, and it is hardly surprising that traders who trade blindly, with no education, are doomed to failure no matter how enthusiastic or inspired they are.
So make sure that you are patient and committed, as you learn forex. Be disciplined about what you do, and it’s only a matter of time before you have a good grasp of what makes the markets work, and then you can decide with true awareness of your capabilities the real potential of your career as a forex trader.
Forex Photo credit: epSos.de via Visual Hunt / CC BY
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