Forex Trading Basics - 10 Commonly Held Wisdoms That Will Destroy Your Account
There is a lot of good forex trading education on the web and a lot which will ruin you. The 10 so called common wisdoms on how to make money don't. This might be why 95% of traders lose, so avoid them and get the right forex education and win.
1. You can Follow a Forex Robot and Win
You can but there are very few robots that do win.
It's an industry designed to appeal to greed and the fact is most of the robots have never even been traded - they are all simulated in hindsight ( check the disclaimer) and never likely to win going forward, as there simply made up knowing the past - How hard is that? Not very. Pay $100 and make $100,000 a year, is not real life!
2. You need to predict prices to win
Prediction is another word for hoping and guessing and wont get you far and you will find your market timing and you're trading signals are as accurate as your horoscope!
Act on the reality of price change on your forex charts and forget prediction - know one knows the future, so trade the reality and the truth and you will have the odds on your side.
3. Buy low and sell high is a Great Way to Make Money
It would be if you could do it but you can't and you will get involved in prediction and also keep in mind this simple fact - most big trends start from breaks of new market highs, so you need to buy and sell higher, to catch the really big forex trends.
If you are not familiar with breakout trading make it part of your forex education if you do, you will catch all the best moves and be in on the high odds trades
4. You Should see if You Can Win With a Demo Account
You might win with a demo account but what does that prove? Nothing, as real hard cold dollars are not on the line.
There is no pressure and forex trading is a pressure industry. To win you have to trade with the pressure on you and demo accounts don't do this.
5. Learn From Your Losses
Learn what - you lost! Big deal losing is part of the game. If you executed your trading signals in line with your system you learn absolutely nothing, don't bother it's a waste of time
6. Continually Learn
If you have a forex trading strategy that's logical you have confidence in and works - why change it?
We all want perfection but it's not possible. I have used the same system for 22 years and never changed it.
Sure, my forex trading system is not perfect but no ones is; it works and makes money and that's good enough for me.
7. Day trading and Scalping Works
Really? Ever seen a day trader with a track record of real profits?
Exactly, there all simulated profits not real ones, just like the forex robots we referred to earlier.
Forget this form of trading, the data is too short to try and work out what millions of traders will do in a few hours is futile.
8. Only Risk 2% Per Trade
Maybe if you have 100k or more but for small potato investors you can't take such small risks as your account will be destroyed by volatility - look to risk 10 - 20% and trade only high odds sets ups...
Better to risk more on these great trades, than low odds trades with 2%.
Most traders try to avoid risk so much they create it - don't make the same mistake.
9. Diversification Reduces Risk
It also dilutes profit potential. If you have a good high odds trade, don't dilute its potential for profit with low odds trades.
Diversification, if you have 100k plus can work but really it's not a way to make a small accounts equity grow quickly.
10. You Need Information Quickly
Why? It doesn't help you win and never will. Everyone has the information quickly, so you can't respond to it or gain an edge, so don't bother trying.
This is one of the biggest myths of forex trading and will make you lose. Stand back and watch the big picture, not the impact of every short term event.
So there you have some currency trading basics, in terms of wisdoms, that are commonly accepted and you should avoid. keep in mind the majority doesn't win so, what most think is true ...well - You know the answer!
