From years of experience in Forex , I can memorize a lot of things which make us lose or completely exit the market due to incorrect actions or bad habits which is a result of some factors surrounds the Forex market... in this article I will show some problems which face me when i was a beginner before 8 years and how i overcome these problems which face us daily in the market . I took a lot of time to overcome these problems but if you read this carefully ,it will help you very much to get professional in the market.
At the beginning let's remember that Forex market is leveraged market and any incorrect trade (without stop loss) can blow out your account money... risk is from nature of Forex trading , if you do not feel in this market that you are in a battle , forgive me, short time and you will fail,Forex trading is not for you.
In Forex you should use all your weapons to win the battle or at least not to exit the battle loser...we should prepare ourselves for the trading not only the strategy ... the strategy is important in trading but what about the human who uses this strategy. Is the human prepared for this ... below you will get prepared for fighting in the Forex.
First / For beginners:
The beginning of any thing is critical point because it is the first step which will allow to you to continue or not . The same in Forex , if you begin, study, practice and take your time then you will achieve your goal and make good results, if not you will exit the market as your choice or even by market force. so l will begin with the issues related to beginners and show how to overcome it.
1.Demo trading:a lot of traders practice Forex using demo account ,they get good results in the demo but when entering live trading ,most of them failed and blow their accounts. WHY ?. Fear -which is one of the demon of Forex trading especially for beginners- is not exist in demo. Fear is existed in live trading due to the probability of losing money... But how to overcome Fear in real money. First, in you first live account deposit the money that you do not need or it will not affect you if you completely lose it, this will free you from fear but not enough. Second, when you deposit money to your first live trading account, deposit the least money your broker can accept (even though you can deposit more easily) because leaving demo lo live trading cause some physiological conflicts which often leads to losses, make your first deposit as a test for what you learn from your demo practice. After 3 months of live trading if you make good results (at least 7 % percent monthly) then you can raise your fund and after another 3 months you can raise fund again if results is still positive.
2.Market conditions:sometimes markets gets calm ,at this time the market deceive a lot of new traders, because often after this calmness is the storm which will blow out your account...market conditions is variable from time to time and you should be able to adjust yourself to changing in Forex market conditions. as example the daily range for GBP/JPY in 2008 is about the double range of 2012. But how to overcome ? this will take a lot of time and experience to understand this but at least you should see history charts to see how your favorite currency move from time to time, see it in 2008 and in 2012 and you will know what I mean ... when you understand this nature of market then you will get professional.
3.Trading plan:a lot of traders enter a trade and once the trade goes opposite them, they ask themselves why I enter this trade ... First of all you should have trading plan before going live trading. why ? because if you do not stick to your trading plan ,it is a problem which may blow your money and if you you never have a trading plan , that is a big problem which surely will blow your account. But how to overcome ? trading plan is an important topic and may be presented later as separated article but in few words trading plan means the way you enter market (Entry point - Stop Loss - Target Take Profit).
4.Stop Loss: if you do not put stop loss ,your live trading period will be very short and you will exit trading quicker than your expectations and you will not benefit from live trading in adjusting your plan and physiology because you exit the trading quickly. But how to overcome ? when you enter a trade, see the chart and ask yourself what is the point -price- which if the trade reach it should not be valid (your trade should turn from buy to sell or from sell to buy) now ,if the point is near your entry point then enter the trader and put this point as stop loss , if the point is far from the entry point then you should not enter this trade because risk is high. stop loss needs from you some logic -when entering a trade- and you can use it simply.
5.Logic in take profit and stop loss:some beginners stopped their trade at profit from 2 - 3 pips but when the trade goes against them they may wait after the stop loss reach 30-40 pips or may be more. In logic that means that you will never survive in the market because one stop loss will hit ten trade profits. But how to overcome ? there no perfect strategy ,the good strategy may give 80 % true entry point for professionals and 50% for beginners, so at least the target take profit should be more than the stop loss.
Second/ For professionals:
What about professional traders ? are they mastering the Forex market ? really there no 100 % master trader in Forex... Great banks which have data and information -we can not reach for- also lose money in Forex... that's fact, so the most problems face professional traders are as follows:
1.Overconfidence :it is good to be confident, but overconfident in Forex can burn your money completely... the problem of overconfident that you behave according to your opinion not the market opinion and it make you over-trade (trade more than your plan says), over-trade means unnecessary losses. But how to overcome ? it is easy, still stick to your strategy plan, stick to your stop loss. Do not forget that your job is to make gains not only to enter market.
2.chasing losses and profits : sometimes professional trader make series of trade profits or trade losses in short time, series of profits increase greed which make us do more and more trades till we lose, series of losses increases the desire to compensate losses and make us do more and more trades till we burn our money completely. But how to overcome ? after series of profits or losses we should stop trading for awhile at least 1 week in order to remove any negative physiological effects , take avocation from the Forex job ,enjoy with your wife and family till you find that you can trade well in the market not take revenge from it.
Third / For all traders :
1.Continue improving that's the last point for all the traders, even you find the profitable method for your trading ,do not set down, continue reading and researching. Discover new methods and ways to improve your performance. Always listen to market opinion not to your opinion.
2.Do not forget, that you trade in the most dynamic market in all the world, you should use all your weapons to survive in this market ,you should be prepared for quick changes in the market, go up if market goes up and go down if market goes down , never stick to your opinion.
3.You should understand the fundamental analysis , I do not say, be expert, but you should know what happened around you and the possible effects for that in your trade. as example, from weeks, we hear about the downgrade of UK, that's would have bad effect in pound, okay you may enter long (buy) in GBP but not for swing (hundred of pips) because the overall sentiment is negative and the bears surely was waiting for a good point to sell from.
in this article, I give you the most problems and obstacles faced me in the last 8 years which I hope you will not face, if you read and practice what I told you here.
please tell me if you want discussions in any point .