27 March 2015

New Forex Traders - Avoid The Traps That Cause 95% To Fail

By Vallorian 27 March , , , , Leave a Comment
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forex trading has become a very popular business to get into lately, but the simple fact is that 95% of people fail at this and only an elite 5% succeed. The reason is actually quite simple, our human nature. We are emotional creatures that tend to make decisions based on instinct, rather than rational. I'm going to present to you what commonly happens to new traders that needs to be avoided.

The Clinger

This behavior usually happens to someone that sees a little success on a trade. They're up and in a profitable position, but like an addicted gambler, they're on a high. They hold onto the currency to see how far it will go up. The currency starts to drop, but they hold onto it hoping to see it go back up to where it was before. It falls below the buying price, but they hold onto it hoping they can get back to a break even.

This is a vicious cycle. You need to determine a profit margin before a trade and exit the trade when you meet it. This is a calculated move that requires no emotion. This way, you make the profit, and you don't lose out in the long run.

The Retaliator

This behavior is pretty detrimental because it puts you in the ""victim"" role. This is the person that has a losing trade. It goes bad and they lose some money. They immediately start another trade with the whole idea of getting back what they lost. This is like the desperate gambler putting his last $100 on the table trying to win back $1000's lost.

You have to understand, you're going to have bad trades. You're going to lose money on some trades. It's how we deal with it. Usually if you're making a trade after a loss, you're making an emotional decision. Be smart, take a breather and wait for a profitable trade.

Tips For Being Calculated and Emotionless

Set Rules Before A Trade: Use numbers stating what you're going to do. If it goes down, you're going to cut your losses at ""this"" point. If it goes up, you're going to take your profit at ""this"" point.
Take A Breather When You're Stressed: Get away from the computer, don't make trades when you're all flustered up. Come back when you have a cool and calm demeanor.
Get forex software: Software like forex Killer is completely emotionless. It digs up trends from currency graphs and lets you know if they're going to be profitable or not. It doesn't get more calculated than that."
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