In the world of Forex trading, for beginners, the biggest fear is failure and the loss of your money. But why do so many newcomers fail?
Well, you already know how you can trade Forex to make money and even earn a full time income. You also know that it is possible to lose a lot of money in Forex, if you don’t do it the right way.
Now while these 2 facts are true, I am often amazed at how many people learn the second the hard way. These people think that currency trading is much easier than it actually is, and the result is that they end up making it even more complicated than it really should be.
Beginner forex trading is something that takes time to master, but I hear a story like this all too often. They usually go into Forex because they knew of someone who was apparently making a lot of money and decided they wanted a piece of the pie too.
They have this person share some tips on how to make money trading, and they believe that this will be enough knowledge to start a successful career in the Forex market.
So they start trading with just a little bit of real knowledge and dream of making a lot of money. If they are lucky, their first trades will be losers. But if they are unlucky, they may make some money.
Hold on! I got it backwards, right?
No, I didn’t do it. Look, if they lose money early on, they probably stop to rethink and have just lost a little extra money. If you really do get some beginner luck and win on your first trades, it just confirms that you did the right thing to jump in and start trading.
What happens then is that the more luck resists them, the more they think they have easily mastered currency trading. For beginners, this is a common mistake and they will soon start taking bigger risks.
When their first defeat inevitably comes, they are devastated. Not only his trading account was affected, but also his ego.
But everyone has the occasional losing trade, right? And what better way to take care of a bruised ego than to recoup that loss in the next trade and more. The problem is, it is just as easy to go through a losing streak as it is a winning streak.
The problem worsens when they desperately pursue losing trades, and take increasing risks, in the hope that only a major victory will put them back in front. Before you know it, your trading account is empty and your dreams are shattered.
This is easy for beginners!
So, let’s look at the mistakes they made:
1) They launched immediately without properly learning the business of trading. 2) They didn’t have a system to guide them, so they didn’t know how to handle a losing patch. 3) They chased losses. Whatever trading system you use must ensure that you never chase your losses in Forex trading.
For beginners, the important thing is to start learning the basics and build a solid foundation of business knowledge from there.