Beginning traders often face hard times when starting to trade. Whether they trade on a live or demo account, the difficulties faced by different new traders are often the same. When you first start forex trading things seem to be so simple and straight-forward; all you have to do is to buy a currency pair and then sell it once the price increases. However a few weeks down the lane and probably after losing most of your account you have come to realize that forex trading is not easy.
One of the biggest issues facing traders is complacency, especially if they fail to fully comprehend the complexity of the market. The forex market is the largest and most volatile financial environment in the world, and it is therefore crucial that traders establish a core knowledge base and prepare for what is in store. Opening a demo trading account through your online brokerage firm is an excellent way of achieving this, as this allows you to practice your strategy in a real time but simulated environment.
Most forex traders seem to be short term, swing or intra-day traders looking to pick up a few pips and move on. What makes this difficult is that trying to accurately predict 20-30 pips over and over again on a consistent basis with a long term profit is something nearly impossible for the majority of forex traders. Longer term trading requires very good knowledge of fundamentals and economics. It takes time to reach all this and most traders probably find it very boring and difficult to follow.
If you want to avoid all those difficulties you need to have an understanding of the type of person that you are so that information can be accounted for in your approach and strategy. Each trader must realistically assess their strengths and weaknesses so they can understand how it will impact their trading decisions. The person doing the trading is the weakest link in the chain. You have to understand and reinforce this link so it becomes as strong as the rest of the chain.
The truth is that even the most successful traders today have started out at some point as fresh traders with the only difference; they dedicated themselves to studying the market and winning the game. It is possible to make a profit when trading in the forex market if you understand the macroeconomic, technical and fundamental analysis and if you can maintain a good trading psychology.