What are the Pitfalls in the Forex Market

By Content-mgr - on October 27, 2015

The forex market seems so easy and appealing to trade, and yet many traders end up losing money or even becoming totally disoriented on market direction.

Why the Forex Market Seems So Easy to Beat

The forex market seems very easy or at least quite possible to predict, that’s how most new traders tend to view it, and this is because they look at past price action. They tend to relate past price action with correlated indicators and this creates the illusion that trading forex is quite easy. But as they begin to trade the real thing confusion rules, and it’s no long before total confusion and lack of orientation makes them lose. Trading on the live forex rates is very difficult even for seasoned traders. It is that psychological factor, as well as the fear of having to deal with a losing trade. When confidence gives in to fear, traders start to believe that it’s all some kind of conspiracy where the market will move contrary to whatever trade they open, so as to make them lose money overall. So what happens to the pre-trading period enthusiasm and drive for fast success? It seems to have disappeared as the harsh reality of the financial markets makes these new traders realize that every easy trading idea, every simple way to trade the markets, has already been tried out by someone else and failed. Or that at least the market is so efficient and saturated that no more simple ideas can fit in.

All new losing traders can reassess their trading, and many of them can really turn their trading around. It’s a matter of changing some habits.

So What Can the New Losing Traders Do?

All new traders starting up in the foex market, need at least several years of trading experience, and actually some trading losses, before they are able to make solid profitable trades. It is a fact that the global forex converter mechanism is so unforgiving, so harsh on new traders, that they stand to lose everything they have. Even older traders who are rather naïve about the markets can still fail down the line, even though they might have had a couple of profitable years. So the lesson here is simple, and it is that one tends to learn a lot from their mistakes and their losing trades, but they hardly learn anything from their profitable ones, because they attribute those to irrelevant factors. So for example if the new trader makes a trade on EURUSD and loses $150 in a day, they will dedicate time and effort to figure out what they did wrong, what indicators let them down and so on. But if they were to win $150 in the same trade, using the same indicators, they would tend to believe that these indicators are really good and dependable. So you cannot become a profitable trader unless you start to think for yourself, and start to question everything, even the actions of the most profitable traders. You have to question so much more, and forget all about confidence. In fact the best way to be confident, is to question everything and consider it as not encouraging any confidence in you. The forex market starts to make much more logic sense when one keeps on guessing, rather than have firm, inflexible beliefs.

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