Is Success in Forex Trading Hard? Read up Why…
When it comes to trading in forex, too many people it may seem it’s just related to the sale and buy and nothing else. If you perceive it thus, it’s likely that you’ll succeed up to 50%. Such a wrong perception makes it hard to succeed. The market makes you believe that it’s simple and easy to trade contrary to the reality that it pretty hard. Why is forex trading so difficult?
You may have a question of why you need to read this. What if reading a difficult makes it easy?
The paraphrase, as you keep on understanding difficult things at a higher level, it becomes easier to grasp it. You will also able to reach your goal pretty faster.
In this article, we’re going to explain the reasons why trading forex is so difficult. At the end of the article, you will get clarity on why you find it so hard and the solution thereof.
Portfolio management art and science of making decisions
Either trading stocks or forex – it is difficult. Why? Because of risk and return. If you risk more than 1-2% of your portfolio there is the strong probability that you will have in some moment 20% or 30% or 50% draw-down. If you have 20% DD than you need a 25% gain to recover the loss, if you have 50% you will need a 100% gain to recover the loss. This is why big corporate companies risk small amounts because when you lose 6% you will need around 6% to recover the loss.
So imagine this – you have $500 and you risk $5 per trade. And after 20 trades at the end of the month, you have a $10 profit. The whole month of work and $10 profit. Now the average trader starts to risk more and trading starts to be difficult. A huge loss, huge risk, gambling with money.
On the other side, you will see that any pattern which has a high probability of winning if we risk 1% and tries to get reward 1% at the most we can have a great probability of around 60%. All this information can influence on traders to be disappointed.
If we use trading theory this is other most common reasons why trading forex is so difficult :
Is trading forex hard?
Why is forex trading so difficult?
1. Insufficient education
To become successful in business, education is immaterial.
It is not relevant. If you have a Master, Bachelor or a Doctorate, we’re sure it’s of little help to succeed in forex trade.
In the eyes of society, you’re educated whereas the market does not think in the same way.
It’s a matter of great importance that I possess no college degree, I had been to school for long but I repeatedly failed to clear the majors. However, I was not successful.
Strictly speaking, I don’t waste time to feel sorry for my decision. Maybe some people don’t feel so. However, note that there are diverse patterns of education and school is one of them.
When it comes to forex trading, you get an education as you gain experience.
You can learn from books like the ones by Market Wizards and from various strategies explained in these web pages.
I created an area for members in 2014 for traders in forex who are really willing to upgrade their learning level.
Note that there can hardly be anything that can substitute experience. Of course, it’s in case of any discipline – the market becomes your perfect for you in trading.
Therefore, what is the most effective way to learn to trade?
Maintain a journal for trading and use it to monitor the observation each trading day. See whether the market respect resistance or support that you offered. If so, determine whether it forms sell or buy signal.
As you keep on recording the market trends, you train your mind without your knowledge.
Over the next few months, you get the skill to recognize the pattern effortlessly. It may look simple but the ideal will work.
2. A poor inclination to accept randomness
No individual in the world is interested to sacrifice control on a situation. On any matter, you like to have some control.
However, note that you can control nothing as for the market,
You’re unable to decide how low the EURUSD is going to fall and you cannot say if the EURUSD will go up or come down as compared to today’s price. It cannot be determined by most people.
What to do then? Such people try to bring into control by referring to the chart for hours as if the market is under their control – what is called telekinesis.
I was just kidding.
When I started trading 10 years ago, I encountered a too tough a problem to ignore. I remember so many nights I went to sleep beyond midnight as I could not ignore my trade trends.
I became preoccupied with my trade and of course, it was not that good.
It occurred to me that if I stayed longer with charts, the trading will worsen.
A significant lesson that I realized all these years is how to accept randomness. Therefore, visualizing everything is important. Even the most predictable trade may and are likely to fail. You’re the sole authority to decide.
To go ahead of all others, look for the book by late Mark Douglas Trading in the Zone. I don’t get any remuneration if I advise you in favor of it. I am happy to tell about the book that was so helpful in the trade several years ago.
3. You have neither a boss nor do you have to follow rules
Most people are in jobs. Whether it’s a desk job, sales job, customer support service, or a product processing service, you have a boss for the user.
Maybe you have more than one boss, Different bosses may tell you to do different things.
I’m an engineer who had a desk job. I understand how the experience is like.
In theory, there’re three director bosses. So, I had to turn up at meetings with all, and there were unlimited assignments to do.
I had to abide by a lot of rules. Each of the assignments from the boss evolves around rules to be followed and the result is gratifying.
Another thing is that there is hardly any freedom. I reached work each day being aware of what I need to do and how to do it.
How to make a comparison then? Are there single or more than one bosses for you? Are you required to seek the consent of your boss to accumulate your capital?
Unless you work for a firm, the response to each of the queries is a no’.
That gives a lot of freedom. You can participate in trade in any currency of your choice. Just deposit an amount you can afford and increase your chance to improve your revenue to the maximum. You may take the risk to your best potential.
Here is the rule of the thumb:
The absence of rules, the markets make low-quality decisions.
If you’re anxious about the rules, take a look at the website. Each piece of content contains ideas that can be processed with special methods.
4. Patience – a great attribute of market players
Patience is a potent and great quality for each trader.
The problem is people badly lack patience. Be it standing in a queue, waiting at a logistics center of an airport or at the checkout counter, people don’t love to stay in a line and wait.
It’s a strange fact that the starting point of successful trading is waiting.
If you don’t spend the most time waiting, you’re not doing everything right. It’s most likely that money is being lost wastefully.
Let’s elaborate on clarity.
There is hardly a second opinion against the saying that people in most cases don’t have enough patience.
Likewise, in most cases, there is a loss of money for traders. And, note that not all traders lose money.
The truth that people have no patience and the loss of money by many traders has a direct correlation as you will discover in the course of business.
Then, the solution?
You must have a lot of patience when doing the trading for sure. This is easier to say but hard to execute. If everyone had as much patience as required, there would have been scores of successful retail traders around the world.
The good thing is that there are only a small number of simple rules to follow:
- Use the regular time schedule
- This will help create more reliable sell and buy signals.
- Build new setups each week
- Create a limit for yourself for each week for one or two trade. It depends on yourself as you’re your own boss.
- Stop struggling
- Making more effort will lead to speeding up the process, working harder might be harmful. It is exactly the way accounts get deleted.
- As you keep on trying very hard and yet you struggle and fail, it’s best to give up trying so hard.
- A wrap-up
The market is shaped such that it can kill your emotion and it has such amazing ability. It’s hard because it’s you that made it so hard. You are not building the process and framing the rules for trading because the market is unpalatable to you. You end up creating rules to shield yourself from fluctuations thanks to the emotions and impulses. Take care of this point when you’re in the market. I assure you will enjoy the journey.