When a trader begins to trade, what normally happens is that the first few trades are usually successful ones. The new traders then becomes so confident of their supreme abilities in trading that their carefully crafted trading plan and money management rules are cast aside.
Suddenly their trades are not going so well anymore, they begin to lose more and more regularly. It almost seems that the market is ganging up on them to rip the carpet from under their feet! New traders being inexperienced tend to take it very personally and then sub consciously decide to punish the market. The position sizes become larger and larger, money management is totally forgotten, and their trading plan is in tatters now. Any piece of rumor or hearsay is taken to be the gospel truth and acted upon. When all these fail and they still lose money, they turn to "sources" that tout the holy frail of trading. That one plan that could make a trader a million in less than a year! (Come on by now wouldn't you have woken up already?)
At that desperate situation, many traders choose to believe these sources and make some hefty purchases. They re fund their accounts and take their new trading plan to the market. History repeats itself, their first few trades makes them money then they being to lose again and again. Soon their account is wiped clean and it is about 6 months from when they first started on their path to forex trading.
Does the above story sound faintly familiar to you? It should because close to 95% of new traders that trade goes through this cycle.
Usually at this point in time I get a lot of applicants applying to join my classes and they clamor and complain that it's the broker's fault or that the trading plan was a rip off or that they were unlucky.
If you found the above example silly or even simplistic, then you are correct. But isn't it surprising that 95% of the people who start off as traders give up after 6 months? Simplistic or silly as it may seem, this happens so often that it isn't even funny anymore. In fact most new traders focus so much on easy and fast profits that they forget the real money making methods.
How then do you stop losing money in Forex and start making some profits? Forex is a business that works best with a defensive stance. If you keep running after the dollars you will only end up losing your whole account! To protect your account must be the first and most important action you as a trader take each time you trade.
There is nothing wrong with the trading plan you started out with or the plan that you bought online or off the shelves. There is noting wrong with the brokers or with the market for that matter. There is a lot of wrong in the way traders think! Discipline both mental and emotional, well planned profit objectives, total money management control. These are the elements that are sadly lacking in the education of many new traders. Prevent yourself from losing anymore money in Forex, plan your trades, trade your plan. Keep a tight rein on your money management, and never take an aggressive stance. This way you will stop the outflow of your money and increase the inflow of pips!
Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book "Money Management" for a limited time only! |
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