Did you become initially involved with Forex trading because you were enticed towards it by the intense marketing campaigns portraying that it will make you rich quickly? However, did you then discover shortly after you started to trade that this initial impression was badly flawed? Were you one of the many Forex novices who lost their entire initial deposits within months from starting your Forex career? Did you also discover that your initial dreams soon turned into delusions and despair?
During this period and if you suffered from any of the above experiences then you would well equate to those associated with many Forex novices as listed below.
Forex beginners have a strong tendency to try to obtain thrills and excitement by attempting to open a large number of positions daily. This is because they think that by doing so that they will produce greater chances of achieving significant profits faster.
Novices do not possess the ability and knowledge to handle their losses very well and fail to understand that even experts make errors on a regular basis.
They also do not persevere with any Forex concept or idea for any length of time if they do not attain the quick riches that they initially expect.
They mistakenly believe that they can forecast the outcome of their open positions so well that at least 80% of them will be winners.
They have gained the impression from constant advertising that they just need to either purchase a Forex expert advisor or trading strategy in order to succeed at their new venture.
Most novices fail to understand the importance of good risk and money management concepts in order to provide the optimum protection for their account balances.
You will appreciate that the above list is pure fantasy if you have already attained any experience at trading Forex. You will also realize that possessing such naïve concepts will only generate substantially fiscal losses over the long haul. In contrast, you can gain a good understanding about just how much work novices need to undertake in order to master a subject as complex as Forex by analyzing the following components of a sound Forex strategy.
- You should restrict the maximum number of trades that you will open monthly to thirty trades.
- You will aim to attain average profits of 20 pips per trade with a maximum target of 100 pips.
- You will target profits of 300 pips monthly and 3000 pips annually.
- Your trades will last in duration form two to six days on average.
- You will aim to open one high quality position per day.
You will evaluate the performance of your trading strategy by determining its win-to-loss ratio and expectancy-value on a constant basis.
You will restrict your risk exposure to 2% of your entire account balance per trade.
By adopting concepts such as those stated above then you will increase your chances of surviving your first few vulnerable months at trading Forex. In addition, you will stop believing that you will obtain quick riches with little effort on your behalf. Consequently, you can prevent losing your entire initial deposit very quickly and adding to the depressing statistic claiming that 95% of all novices do precisely that?
If you have already endured losing all your money then you must now appreciate that you need to alter and develop your trading mindset so that you can cope with the worst that Forex can generate. For instance, you must begin to dismiss any unsubstantiated notions about instant new wealth and start focusing on restricting your risk exposure as your top priority. In order to achieve this objective you will need to acquire skills and experience such as the following.
For example, you will need to learn how to focus on your trading so that you are not easily diverted by the constant bombardment of Forex advertisements. In addition, you must gain confidence in your own beliefs concerning Forex so that you do not need to just mimic those of other Forex traders. You will also know immediately when you need to increase your Forex skills by seeking new educational supplements.
You must possess such a good understanding of technical analysis that you will be able to trade with the trend as a matter of course. You will have attained such confidence in your trading strategy that you will consider your losses as just components of its win-to-loss ratio. You will start to enjoy your Forex trading because you will not be inundated with the stress and tension that constantly emulates from the fear of losing. You will acquire such a sound knowledge about the entire subject of Forex that you will be able to analyze and extract the best ideas from all the latest Forex ideas and inventions.