Forex is highly leveraged, so there is a huge potential for profit. Despite this, most forex traders don’t achieve their potential. They walk a fine line between profit and loss, eventually reaching a point where they give it up and quit for good.
But this doesn’t need to happen. With a bit of careful analysis, you can conquer your demons, eradicate the obstacles holding you back, and achieve measurable returns on your trading capital. In this article, we are going to examine some of the things holding you back and look at ways to push through to the next level of success.
1. You Lack Confidence
Forex traders need confidence in their trading strategy. If you have zero confidence in your plan, you are very likely to deviate from the strategy and end up losing money as a result of impulsive decision-making.
Unsuccessful traders change their mind about trades at the last minute. The moment things start going wrong, they have a crisis of confidence and begin to second-guess their trading strategy. It is impossible to make serious money if you keep adjusting your stop loss limits.
Start with a demo account on easyMarkets Australia and hone your trading strategy. Only move to a ‘live’ account when you are consistently making money.
2. Keep a Cool Head
Impatience is the enemy of successful forex traders. Yes, in your head there is always a bigger and better trade out there, but if you rush full steam ahead and open a trading position that’s contrary to your trading strategy, it is risky in the extreme.
The more impatient you are, the more likely you are to make a series of sub-optimal trades. This, in turn, will knock your confidence, which has a knock-on effect.
Try and maintain a cool head. Stick to your trading strategy and don’t deviate from this, even when a trade looks too good to pass over. Experienced traders keep a trading diary. This helps them spot patterns in their trading activities. If you are more prone to making losing trades on a whim at certain times of the day, take a break around then.
3. Analyze Your Trades in Detail
There will always be losses. Owning these losses is the key to success. Be honest about why you lost money on a trade. Did you ignore the data? Were you too late to react to a trading signal, but you figured you would make the trade anyway?
You are the architect of your own misfortune. Don’t blame the forex markets and popular trends for conspiring against you. A bad workman always blames his tools, which doesn’t help him in any way. Successful forex traders learn to own their losses and analyze what went wrong, so they can avoid making the same mistakes again.
Once you have identified any psychological flaws in your makeup, it is time to look more closely at the trading system you are using. It takes time to create a trading system, so be prepared to tweak it along the way.
It is worth taking notes from other successful traders and, in the beginning, copying their trades to see how they operate.
