As attractive as the Forex market is to many people, the hard statistics show that the vast majority of Forex traders fail in the long run. That is not to say that there are not many traders that make a nice living from the Forex market, there are. However, if we can understand why so many people fail, maybe we ourselves can become a part of the minority that succeeds.
Here are some common mistakes made by Forex traders:
Search for the magical solution.
A lot of people are attracted to the Forex market because it generates a lot of hype. The reason it generates so much hype, is because the potential for Forex profitability is endless. However, the nature of hype is that it misses a few details along the way. Yes, you can make a lot of money from Forex trading, but not without working hard at it.
There is no one magical indicator that once you figure it out, the dollars start pouring in. It is true that technical indicators can give you a hint of what is to follow in the market, but nothing, absolutely nothing is 100% in the Forex market. Like everything in life, best things come to those who wait. So learn the market, practice, read, and only then should you trade. Expect some loses and do not let them affect your future trading, and just keep at it. You will eventually see your bank account grow assuming you make educated decisions along the way.
Desire for easy money.
Many people, in fact all people, after working a 9-5 job, are interested in a way to earn easy money. Since the Forex market has become such a buzz word over the last few years, people think this easy money will come via Forex trading. They could not be more wrong. It is true that Forex trading can be from the convenience of your own home, and you have the ability to buy hundreds of thousands of dollars at the click of a button.
Yes, that part is easy. But then again, so is throwing your money into the wind. The trading itself might be easy, but making profits consistently is far from easy. It takes a lot of discipline, a broad education on the topic, and a tremendous amount of patience on the part of the trader.
Need for a rush.
There is no doubt that the ability to trade astronomical amounts of money can cause excitement and a rush for many traders. However, if that is the reason you entered the Forex market, you are in for a very big surprise. This might be the most expensive endeavor you ever tried to achieve a rush.
It is true that the available Forex leverage of the Forex market gives you endless options as a trader, but the danger it presents is just as great. In fact, excitement is not the only emotion that should not drive you in the world of Forex. All emotions should be left outside of the "Trading room".
Lack of self-awareness.
Forex trading can be an emotional and psychological Forex roller coaster. So many emotions can be a part of your trading day and if you do not have enough control over them, can be detrimental to your Forex career. You need to be completely in tune with yourself and adjust your trading plan according to your personality. Just to explain with an example, do not become a trader that leaves positions open over night if you know about yourself that this will cause anxiety and fear. Trade with a plan that fits you and who you are.