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Avoiding Failure in the Forex Market
Forex trading can be an incredibly profitable way to make a living. The combination of margin leverage and a low minimum amount required for trading make forex trading ideal for small investors.
However, despite the opportunities for profit, the majority of forex traders lose all of their money within a year.
Why? Well I have found six root causes that can explain why so many new forex traders fail:
1. Unrealistic Expectations. Too many novice traders read about how easy it is to make money trading forex and they just jump in and lose everything before they even know what hit them.
Forex trading is not a get rich quick scheme. It requires hard work and research to be successful. And even then, you cannot expect every trade to be a winner. Even the best traders lose on trades. The key is knowing when to cut your losses and focus on the winners.
2. Not doing enough research. Forex trading is easy to learn, but difficult to master. Experienced traders make it seem so easy, but predicting currency prices is a complex endeavor. And as a small investor you are at a disadvantage. Large financial institutions have resources that you don't. They may have an entire staff analyzing the most recent economic indicators while you just have yourself. You must be prepared to spend some solid time learning before you can expect to win big.
3. Gambling instead of investing. If you think you can beat the market without doing research and just picking currency trades based on a hunch, good luck. I've seen people do this and they usually pick a few winners and make some short-term profits, but in the end they just get slaughtered.
4. Lack of focus. Depending on which broker you use, there are likely dozens of currencies you can trade. But when you are just starting out, think small. Pick a few of the most popular currencies, such as the US Dollar, the Japanese Yen, and the Euro, and focus exclusively on them. The more currencies you trade, the more data you will have to analyze in order to spot trends. Better to know a few currencies really well than to know just a little about each.
5. Not having a trading system. There are literally hundreds, if not thousands, of different trading systems available. Some you will have to pay for, but many are free. Choose a system that is right for you based on your capital, your goals, and your personality. Without a system, you might as well be throwing darts.
6. Not sticking to your system. Having a trading system is not enough, you have to follow it through good times and bad. This is easier said than done. Its easy to get greedy and go for the big score or get nervous and get out too soon. You must follow your system to determine both entry and exit points. If you ignore them you risk missing out on a big upswing or being stuck in a trade as it goes sour.
The best forex traders know that knowing when to get out of a trade is even more important than knowing when to get in.
Recent Forex News
Forex Technical Analysis Reports (ActionForex.com)
Technical analysis reports from selected analysts around the world on forex market. Available in ActionForex.com
Daily FX Report
The GBP/CHF comes to one trading range after another. The market traded one month between its levels 1,9601 and 2,0266. In the middle of March there was a break through the channels support and the market came back to its old range from the beginning of March. It tried to...
Forex Technical Update
Euro surged by 97 pips from the days opening level of 1.5392 to touch an intraday high of 1.5489 (55 4-Hrly EMA) before closing slightly lower at 1.5481. The 4-Hrly stochastics shows selling pressure along with the Daily charts showing a downmove. Immediate resistance comes in at 1.5489 levels (55...
Technical Analysis for Crosses
The Pound started to gain back today against the Yen after the had been undergoing a correction that took the pair to the 50.0% correctional level at 200.79, now the short term momentum indicators are showing the pair is being traded within an overbought area and needs another slight correction...
FX Technical Analysis
EURUSD Comment: A 'doji' candle on Thursday and on the weekly chart suggests we have found an interim low and will consolidate above here for several days. For this morning prices should hold above 1.5350 with a sustained break above 1.5450, while a break above 1.5500 should set off a...
Technical Analysis for Major Currencies
The European currency is still consolidating above the 1.5390 area with low momentum to beat any support or resistance that will make it define a specific trend, yet we still believe that the upside direction is the highest probability but we need to see a break to the 1.5490 area.
Newsfeed display by CaRP
Forex Fundamental Analysis Reports (ActionForex.com)
Fundamental analysis reports from selected analysts around the world on forex market. Available in ActionForex.com
Daily Financial Market Outlook
The focus will be on inflation this week, with the latest monthly data due in the UK, US and euro zone. The continuing rise in crude oil prices and higher food prices suggests monthly rises could be strong, keeping annual comparisons at uncomfortably high levels. However, the impact of rising...
Heavy Inflation Load!
Well after the US took sometime to gather pace last week giving the European Continent the spot to grab all the attention announcing their steady rates, on again INFALTION GAUGE! That leaves us with the three major banks on speculative hold due to rising inflationary threats!
Falling Business Confidence Puts RBA on Awkward Footing
Australian businesses were at their most pessimistic in April since September 2001 according to National Australia Bank, whose confidence index dropped to -8 following last month's reading at -4. A negative reading signals more survey respondents expect their prospects to deteriorate versus improve in the near term. The result supports...
Dollar Firms Up In Asian Trading
There is no real change in Japan's slowdown according to the Eco Watcher's Survey which reflects the sentiment of 'on the street' service providers such as taxi drivers, hairdressers and local food vendors. The decline in the headline numbers has been consistent and reflects the growing lack of consumer confidence...
Asia Session Recap
The beginning of the trade week in Asia brings some talk of the US Dollar being oversold, thus the dollar strength that we are seeing at play tonight. As well, we see futures traders betting there is an 82% chance that the Fed is done with its cutting cycle, while...
Newsfeed display by CaRP
Forex Technical Analysis Reports (ActionForex.com)
Technical analysis reports from selected analysts around the world on forex market. Available in ActionForex.com
Daily FX Report
The GBP/CHF comes to one trading range after another. The market traded one month between its levels 1,9601 and 2,0266. In the middle of March there was a break through the channels support and the market came back to its old range from the beginning of March. It tried to...
Forex Technical Update
Euro surged by 97 pips from the days opening level of 1.5392 to touch an intraday high of 1.5489 (55 4-Hrly EMA) before closing slightly lower at 1.5481. The 4-Hrly stochastics shows selling pressure along with the Daily charts showing a downmove. Immediate resistance comes in at 1.5489 levels (55...
Technical Analysis for Crosses
The Pound started to gain back today against the Yen after the had been undergoing a correction that took the pair to the 50.0% correctional level at 200.79, now the short term momentum indicators are showing the pair is being traded within an overbought area and needs another slight correction...
FX Technical Analysis
EURUSD Comment: A 'doji' candle on Thursday and on the weekly chart suggests we have found an interim low and will consolidate above here for several days. For this morning prices should hold above 1.5350 with a sustained break above 1.5450, while a break above 1.5500 should set off a...
Technical Analysis for Major Currencies
The European currency is still consolidating above the 1.5390 area with low momentum to beat any support or resistance that will make it define a specific trend, yet we still believe that the upside direction is the highest probability but we need to see a break to the 1.5490 area.
Newsfeed display by CaRP
Forex Fundamental Analysis Reports (ActionForex.com)
Fundamental analysis reports from selected analysts around the world on forex market. Available in ActionForex.com
Daily Financial Market Outlook
The focus will be on inflation this week, with the latest monthly data due in the UK, US and euro zone. The continuing rise in crude oil prices and higher food prices suggests monthly rises could be strong, keeping annual comparisons at uncomfortably high levels. However, the impact of rising...
Heavy Inflation Load!
Well after the US took sometime to gather pace last week giving the European Continent the spot to grab all the attention announcing their steady rates, on again INFALTION GAUGE! That leaves us with the three major banks on speculative hold due to rising inflationary threats!
Falling Business Confidence Puts RBA on Awkward Footing
Australian businesses were at their most pessimistic in April since September 2001 according to National Australia Bank, whose confidence index dropped to -8 following last month's reading at -4. A negative reading signals more survey respondents expect their prospects to deteriorate versus improve in the near term. The result supports...
Dollar Firms Up In Asian Trading
There is no real change in Japan's slowdown according to the Eco Watcher's Survey which reflects the sentiment of 'on the street' service providers such as taxi drivers, hairdressers and local food vendors. The decline in the headline numbers has been consistent and reflects the growing lack of consumer confidence...
Asia Session Recap
The beginning of the trade week in Asia brings some talk of the US Dollar being oversold, thus the dollar strength that we are seeing at play tonight. As well, we see futures traders betting there is an 82% chance that the Fed is done with its cutting cycle, while...
Newsfeed display by CaRP