What is it that makes roughly 95% of Forex traders unprofitable?
Answer: It is an inaccurate understanding of Forex trading and the Forex market.
One day a certain speaker asked his audience this question: “would you like to get rich quick?”. The hearts of the people in the audience leaped with excitement as they immediately thought of all the things they could do with their new-found wealth. The speaker hooked their interest and proceeded to fan the flame of their excitement by asking, “What if I told you I knew the secret to Forex trading?”. As the presentation progressed, the speaker presented his Forex trading stats of the past three months. Amazed that his account grew 120% in the last three months, the audience was ready to purchase the speaker’s serve. Like sheep going to the slaughter, they forked over substantial amounts of money and were soon disappointed.
The secret of Forex is simply this: “There is not a secret to Forex”. Lured in by the false hope of getting rich quick, many Forex traders get poor quick. Whether it is from purchasing multiple Forex services, or trading themselves, numerous people find themselves broke as joke because of a faulty understanding of Forex Trading.
Is getting rich quick in Forex possible? Absolutely, and so is getting poor quick. If you happen to double your account in a month, chances are, you will try to do it again and end up losing more than you initially profited.
As the world’s largest market, the Forex market holds the most potential, but if we approach it with a “gambling”, “lottery”, or “get rich quick” mindset, chances are, we may be part of the 95% of Forex losers.
With 2013 right around the corner, let’s make a New Year’s resolution together to NOT approach Forex trading like the lottery.
We are going to take a look at three essential aspects of Forex trading. If we have the accurate understanding of Forex trading, we are positioning ourselves for long-term success. The first understanding we need in regards to Forex trading is “security”.
Before you invest, it is critical to have your financial house in order. Your Forex trading should not consist of using your last $1,000 to create some much needed cash. This is a recipe to disaster. Investing should always be done with money that you can afford to lose. Why? Because it is possible to lose it! Investing always consists of risk.
Here is the truth: when you trade with money that you cannot afford to lose, the emotional pressure becomes so heavy that you could easily lose everything in result of unreasonable decisions.
Please do not put you and your family’s financial security in jeopardy by risking money that you can not afford to lose.
If you are not in a position to trade, then do not trade. Without the foundation of financial security, your “wealth house” will crumble when the storms come.
If you practice this principle, you will not go into depression when you lose money. By the way, it is very likely you will lose money before you gain any. Becoming a profitable trader is a process.
How you think about something is how you will treat it.
How you see things, is how you’ll value things, and how you value things, will determine how you treat things.
If we would like to make money with Forex trading, let’s have the correct perception of what it is. Forex trading is a stream of income. It is not a hobby. It is not a sophisticated gambling method. It is not “the stream of income”, but rather “a stream of income”.
This is a crucial understanding to possess because if we do not see Forex trading as a stream of income, or a business, we will not treat it as one. We will easily be moved by our emotions and make decisions that could be regretted in the future. If we see it as something very valuable, we will treat it with care, and handle it seriously and professionally.
We need a plan. Winston Churchill said it best, “He who fails to plan is planning to fail”.
Once we develop a plan, we can then submit to it. “Submission” simply means to come under a mission. “Sub” “mission”, when we have a mission (or plan) we can then submit to it with discipline and consistency.
First, we need a plan. There are many resources on finding Forex strategies and developing Forex trading plans, but for times sake, let’s be very elementary.
Get a plan, try it on a demo account, after a certain time period of success, trade it live. If you later find that your plan is becoming ineffective, adjust your plan, and trade it on demo again until it is suitable for a live account.
Never feel obligated to risk your money, but if you are entering a trade, let it be in the parameters of your Forex trading plan.
As many of you know, the market is dangerous. Jumping in without a plan would be like jumping in the middle of the ocean without knowing how to swim.
Some traders may say “I want to turn this $10,000 into $100,000 in the next 10 years.” If you ask them “how?” they may give you a blank stare.
Truth is, a goal without a plan is a fantasy. To be a real trader, we need to face reality, and really stick to a plan.
Discipline and consistency are key. By the way, if you are not consistent in your budget, you will probably not be consistent with your trading plan. If you don’t have a budget… please do not trade.
On the other hand, flexibility is also essential. If a plan has stopped working, maybe it needs adjustment. Cease live trading for a time period as you develop and test your critiqued strategy and then get back at it.
In conclusion, because of the abundance of lies, it is more important now than ever to know the truth about Forex trading. With financial security, a correct perception of the market, and submission to a Forex trading plan, you are setting yourself up for success! You can do it!