Top 5 Challenges Forex Traders Commonly Face and How to Overcome Them
Many resources say that more than 90% of traders lose their money, and 80% of day traders don't make it past two years before they quit.
It’s likely that their perception of trading is the opposite of reality. Many new Forex traders believe currency trading will help them make quick cash.
While it's totally possible, you need to realise that it requires time, money and effort to earn a profit.
Even seasoned traders encounter bumps along the way. The only difference between a new and a professional trader is that the latter has likely gained discipline over time. This allows them to identify their mistakes and then get back on track.
Here's how you can go from a newbie to a seasoned investor in 7 ways.
In his book Unlocking the World's Largest Financial Secret, author and global financial leader Mario Singh talked about some of the common challenges traders face. Let's look into five of these and the appropriate solutions to overcome them.
1. "The strategies don't work"
More often than not, traders are to blame as to why their strategies fail. They either meddled with or doubted the process they set in place. If you exited too early, for example, you prevented the trade from running its course. How can you say that it failed when you didn't stick to the trading plan?
Trust your strategy and allow it to provide you with the intended outcome. Keep your impatience in check so you don't end up disrupting the process.
2. "I'm not making as much money in my live account"
This happens to most newbies in Forex trading, where they are earning less than what they ambitiously projected. This is mainly because the strategies that they use are not tested and validated thoroughly yet.
Practise with a demo account first. This way, you can test your strategy or new knowledge without hurting your capital. Once you're confident with your skills, you can then trade using a live account.
Your success in demo trading, however, may not translate into live trading if you didn't take the experience seriously or value virtual money like you would actual money. So treat your practise sessions as real-world trading.
3. “I can't keep my emotions in check”
Trading psychology dictates that you stay in control of what you think and feel with every trade. Don't allow greed, ego, or fear to influence your trading decisions. This is easier said than done, however.
A lot of traders succumb to their fear of missing out and ruin what could have been a perfectly good trade.
Keep your emotions in check with a sound trading plan. If you stick to a strategic rather than emotional approach, you'll likely make profitable decisions. Remember to remain faithful to your plan and your strategies will work.
4. “The charts don't make sense”
This may be because you already think charts are difficult to deal with even before you know how to interpret them. Knowing how to identify trends and interpret key indicators are essential to your success as a trader.
Learn to read and understand the charts. Those lines and patterns will show you price and market movements, which your trading decisions are partly based on.
Ask for help and advice from a mentor and take every opportunity to gain new insights into Forex trading.
5. “I can't stop trading”
There are a few possible reasons that you overtrade.
- You want to get rich quickly, in which case you trade more to profit more.
- You're chasing your losses, opening one trade after another in the hopes to recoup the money you lost.
- You've become greedy and you want to double or triple the recent profit you made.
If you find yourself in any of these situations, stop and step back. None of these will land you a positive outcome. Go back to where you're safest -- trading with a plan and allowing your strategy to run.
Forex traders, especially beginners, will struggle first before they become consistently profitable. Make sure you cultivate positive habits early on so you won’t become part of the statistics. Through discipline and developing good trading habits, you are on the right track to achieve great success.
Ready to grow your wealth in the world's largest financial market? No better place to start than right here with us! Start trading with Fullerton Markets today by opening an account:
You might be interested in: Top 7 Reasons to Trust Fullerton Markets as Your Forex Broker