One statistic you don’t hear too often is that within six months 90% of all of the new Forex traders won’t be active in the market anymore.
In order to avoid becoming part of that 90% here’s four simple rules to follow.
- Don’t get caught up in becoming rich overnight. The idea that you can take a small account and increase it 100 fold or even 10 fold within a few months simply isn’t realistic. What happens to some new Forex traders is that perhaps one of their early risks pays off. Then, they think that if they continue to take risks with a relatively small amount of capital they will continue to get the same type of return as they did before. When, the fact is they just got lucky. Getting lucky once doesn’t mean you’ll get lucky twice. So begin by trading in small amounts.
- Working in tandem with the pursuit of unrealistic returns is the pursuit of a once in a lifetime system. Instead of doing the work and research they need to be successful, many traders spend their time in search of a system that will allow them to take a shortcut on the path to profitability.
- Some Forex traders who get an early taste of success can become overconfident. They see that many of the traders with whom they started have fallen by the wayside and now start to believe that they have some ability that makes them immune to failure. This type of arrogance leads to risky behavior. Risky behavior leads to risky trades and risky trades lead to big losses.
- Relating to the previous item is the feeling that some traders get regarding their relationship to the market. They give themselves credit when they’re successful but blame others (bad luck, their broker, the market) when things aren’t going so well. It’s important to hold yourself accountable in good times and bad.
With so much happening in the course of a volatile Forex trading day, it’s easy to lose sight of your sense of perspective. Veteran traders have come to know this over the years while many newcomers, roughly 90% actually, find this out the hard way.
