Jul 09
26
Why Most Forex Traders Fail
The bad news is that most Forex Traders fail. The good news is that failure is success turned inside-out, but only if you learn something from your previous failure.
The story that comes to mind is the one about Colonel Sanders — How he tried a thousand times to come up with the one fried chicken recipe that could make him a fortune. Just think if he had gotten discouraged and quit. Well, suffice to say, there wouldn’t be any KFC restaurants in China today.
Unfortunately, we Forex Traders don’t have the luxury of failing a thousand times. On paper, yes but the fact remains that amateur Forex Traders are blowing out accounts at an alarming pace. One reason for this is something we’ll refer to as the method complexity syndrome. Traders will research a trading method, buy it and the minute they receive it, they fast forward to what they consider to be the guts of a method and completely ignore the most important facets of trading, especially risk management, discipline, and psychology.
It’s most unfortunate. They’ll jump right into the core of the method looking for that great big, mysterious, slap-your-forehead, jaw-dropping “secret” which will suddenly unlock the mysteries of Forex. Much too often traders find themselves miffed that the so-called “guts” of a method reveal nothing but something they already knew about, but did not practice. Then take it a step further, amateur traders will often dismiss a method as being too simple.
On the other hand, amateur traders will look for that complicated formula; a cryptic combination of indicators and technicals that all they discover are a set of simple indicators working together in an uncommon way. Perhaps not knowing any better, they become disappointed or frustrated, because they wrongly assume that any method must be complex (Can’t possibly be SIMPLE!) So, they put it on a shelf or write the method off as “not complicated” enough, believe it or not.
For the ameteur trader that’s a fatal flaw. Most will then repeat this cycle and will never take the time to learn and understand the full scope of trading discipline.
Please don’t make this mistake. Understand that most trading methods out there are not complicated. They meld a smaller set of rules together in a simple manner (simple enough that anybody can apply them) but apply them in an uncommon way. Complex systems are for computer geeks and big banks — if you can’t understand something, you can’t possibly apply it.
The upshot is never skip ahead when learning a powerful new method for trading Forex. Make certain you learn the setup, entry and exit rules (which should exist) so you’ll learn how to protect your trade with stops, and that you learn how to apply your method in a timely manner (albeit hourly, daily or weekly) to get the most out of the method and to learn how all facets of the teachings work in synergy to make you a better trader.
Keep in mind, simple but powerful — Using just a few indicators or rules applied in a non-textbook approach is the key to getting an edge in the markets.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
