Why Is Forex Trading So Difficult?
Have you ever wondered, 'Why is forex trading so difficult?' Or are you one of those gifted traders who can see the trends clearly, and then execute your trading ideas into the market with uncanny accuracy?
The truth is, trading Forex is challenging. Most traders start with flawed expectations, and more frequently than not, those who are most successful in their careers struggle the most.
Why is that?
In this tutorial, Duncan Cooper explains why Forex is so difficult and why most traders start on the wrong path.
But more importantly, Duncan clearly outlines the best approach newbies, or intermediate-level traders can follow to get back on track and trading confidently.
To do this, you will require a few critical elements, which Duncan clearly explains, based on his long history of trading the FX markets.
If you find yourself searching online to find the 'Holy Grail' of trading, then STOP. Focus on the content in this video and action the specific points Duncan mentions. You will be thankful you did.
In this video we’ll cover the 4 topics below:
The market is always right
Traders expect that they'll be right all the time. They expect that each trade will win and that no trade will lose. The market is always right. And sometimes you are trading on the right side of the market. You as a trader are never in control of the market direction. Now for many traders, this is a very hard concept to grasp and understand.
Traders with very successful careers, such as CEOs, lawyers, and accountants, who are used to being in control are often very poor traders because they can't control what the market will do. These traders are always searching for a way to control the market so that they can always be right. This is a futile exercise.
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Flawed expectations
Next, we'll discuss flawed expectations. Traders have the expectation that they can make large gains after a few weeks of trading the?Forex ?market. In search of large gains, traders risk too much per trade and usually get the opposite result. Traders should look to risk no more than 1% to 2% of their account balance per trade.
Now, if you're making a gain of 1% to 2% per month on your account balance, you'll be the top 10% of traders. Yes, there are traders making larger gains per month, but they started making small gains per month before progressing and becoming very consistent traders. You have to learn to walk before you can run.
Lack of a consistent approach
A lack of a consistent approach. This is probably the biggest reason why traders fail. Traders move from one?strategy ?to another. Without proving that the strategy can make consistent gains over 20, 40 or 60 trades. As soon as they have a few losses, they switch to a new strategy in the belief that there's a strategy out there that only has wins and no losses. In the end, they never find a consistent approach because they continue to switch in search of the ‘Holy Grail’ of trading strategies which doesn't exist.
You should forward-test your strategy so that you have a clear understanding of how many wins, losses, and break-even trades your strategy produces over a series of trades. Then when you have losses, you'll understand that they are just business costs to trading a profitable strategy.
Now, here are the trading results of a strategy that I tested over a hundred trades. There's a run in distribution of wins, losses, and break-even trades. I had 26 wins, 35 losses and 39 break-even trades. I had more losses and wins, but the strategy returned a gain of 18% over 101 days of trading proving that you can have losses and still be very profitable.
And failure to stick to a trading plan
To finish, let's discuss failure to stick to a trading plan. Most traders never take the time to write and then follow a written trading plan. Traders take a random approach to taking trades and don't follow strict entry and exit criteria. How can you then review and work out what is or isn't working for you when each trade is different from the next? Traders want trading to be easy and most take the easy way out.
They want to be profitable but won't put in the time and effort to write a written trading plan, then forward-test it over a series of trades to ensure that their trading plan is profitable.
You must treat trading like a business. Have a business plan, which is your trading plan, and treat a trading loss as a business expense and ensure that your losses are small. Finally, always understand that the market is always right. And you as a trader cannot be right all the time.
Register for Duncan's new webinar trading schedule here?https://acy.com/en/education/webinars
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