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Posted on Sep 10, 2019 at 11:49 AM
In life, somethings don’t go together Like salad and pizza, smoothie and chocolate, those who love to keep it safe and those who risk it all for the thrill of pleasure.
Hi there! It's nice to see you follow up with this series, as we will be wrapping off on this topic with this piece.
Last week, we started with 2 reasons why I believe trading is so difficult and this week we will share 2 more so that you’ll have a better understanding as to why you’ve been struggling and what to do about it.
If you are yet to see the first 2 reasons, take a few minutes and click here to read it now, so that you can have a full grasp of this topic.
Most of you probably have jobs. Whether you sit behind a desk, walk around helping customers all day, or work under the hood of a car, chances are you have a boss.
You may even have multiple bosses. Telling you what to do, and when right?
I know the feeling. I used to work behind a desk as an engineer.
On paper, I had three direct bosses. That meant three people I had to go to every time I wanted a leave from work, a LOT of meetings, and a never ending flow of assignments.
Essentially, I had a ton of rules. After all, an assignment from your boss usually involves a list of rules to follow so the outcome is satisfactory.
Another way to put it is that I didn’t have much freedom. I arrived at work every day knowing what needed to get done and in what order.
So how does trading Forex compare? Do you have a boss or multiple bosses? Do you have to ask permission to raise your leverage or add capital to your balance?
Unless you’re working for a trading firm, the answer to every question is NO.
That gives you a ton of freedom. You can trade whichever currency pairs you like, deposit as much money as you can, and increase your leverage to the max.
You can also risk as much as you want on any given trade. In many ways, it’s the opposite of working for someone else.
But here’s the deal…
That’s all the more reason for you to develop a set of rules to follow. The very lack of rules in the Forex market begs you to make poor decisions.
The bottom line is that most people need rules and a process to follow in order to succeed. That’s true whether you’re trading Forex, studying for an exam or training for a marathon.
If you’re curious about what some of your rules should include, just have a look around this website. Every lesson and article is full of ideas you can use to construct your own process and set of rules for trading the Forex market.
It also happens to be an incredibly powerful and lucrative quality for a trader.
The issue is that most people lack patience. Whether standing in line at the checkout counter or waiting for your turn at the ATM, people don’t like to wait.
The irony is that waiting is the foundation of good trading.
In fact, if you aren’t spending most of your time sitting and waiting, you’re doing something wrong. Most likely, that “something” is losing money on subpar trade setups.
Let’s take a step back for a moment and connect the dots.
I don’t think anyone will disagree that most people lack patience. Not all, but certainly most in my experience.
Similarly, most traders lose money. Again, not all, but most.
Is that a coincidence, or is there something more to it?
After more than a decade of experience, I can guarantee you that it is not a mere coincidence. The fact that most people lack patience and that most traders lose money is as direct a correlation as you’ll find in this business.
So what’s the solution?
Have more patience when trading, of course. That’s easier said than done though, right? If everyone could simply “have more patience” there would be a lot more profitable retail traders in the world.
The good news is that there are a few simple rules you can follow that will help.
Doing so not only produces more reliable buy and sell signals, but it also slows things down.
Instead of frantically searching for your next setup this hour, these time frames allow you to wait several days.
That may sound like a bad thing until you recall that less is more when trading the Forex market.
Give yourself a weekly limit of one or (at most) two trades. If you reach that number on Tuesday, you’re done for the week.
It’s up to you to hold yourself accountable because as I mentioned above, you are the boss. Nobody else is going to slap your hand right before you’re about to enter your third trade of the week.
It’s up to you. Write your weekly trade limit down somewhere visible and do not deviate.
Follow this rule for at least a month and see if your results improve. I can all but guarantee that they will.
Yes, you read that right. It’s easy to think that the harder we try, the better we’ll become and the more money we’ll make.
However, trading is different. While exerting more effort toward your goal to run a marathon might speed up the process, ‘trying harder’ as a Forex trader can be devastating.
It’s how accounts get wiped out. You experience a series of losses so what do you do? You try hard to make back the money you lost.
You know what happens next. You lose even more money, right?
If you’ve been trying hard and thinking about Forex day and night yet you’re still struggling, try to stop caring so much.
Give your trading goals some breathing room and let the process work for you.
I could go on for days about why people aren’t wired to be great traders, at least not from birth. The markets are built to prey on our emotions, and they’re incredibly good at what they do.
That means you won’t be a great trader in the beginning. It’s important to accept that as a fact and to embrace the process of getting to greatness.
Yes, trading Forex successfully is tough—and not because it’s complicated or requires some form of advanced education.
It’s difficult because you make it difficult.
You may disagree with me, and that’s okay. I’m used to it. Heck, someone disagrees with me every time I buy or sell a market.
Note that you will be your own worst enemy in this business if you risk too much, trade too frequently, gamble on the news, or all the above, it’s all your choice.
Don’t develop a process and set of trading rules because you think the market is difficult to read rather You create rules to protect yourself from your own impulses and emotions.
Keep that in mind as you navigate the market this week going forward and I guarantee you’ll find the process more enjoyable.
For next week’s Q&A to be successful and provide an invaluable collection of answers to common Forex questions, here’s what you can do to get involved and have your question answered in next week’s post: