3 Common Hurdles New Forex Traders Often Encounter
The process of learning how to trade forex can be a complicated one. Foreign currency trading is a technical discipline which requires a consistent effort to master. A trader cannot simply master a skill like forex trading overnight. There is always room for growth in understanding and the errors that help build a trader's wisdom. These following mistakes are very common and frequently made by new traders. Take heed so you do not fall into the same traps!
1. Blowing Out A First Account After Successful Demo'ing
Universal advice tells the new trader to learn their system and produce positive results on a Demo account. This is absolutely sound advice because you do not have to spend any money at all to practice your strategy or hone your abilities. All reputable brokers offer Demo accounts so you can test their platform and see if it is something that will work well for you.
The problem occurs when the new trader has successfully built up profit, decides they are ready, switches to a Live account, and promptly blows up their account. How does that happen? Well, the trader is simply not prepared for the stress that comes with Live trading. It's a lot different when it's your real money on the line and not just some play money from the broker.
Avoiding this pitfall can be difficult because for some it is part of the learning process. When you're ready to go Live, do it with a micro account and a couple hundred dollars. If you can get positive results with that, simply add to your balance. Better to blow out a couple hundred dollars than a couple thousand.
2. Paying Far Too Much For Information Available For Free
Gaining experience is a process fraught with failure and success as we claw forward. What better way to benefit our own trading than utilizing the experience of people who are already successful in what we want to accomplish? There are some great books and instructional material out there from experienced minds that can provide an exceptional benefit while learning to trade.
On the other hand, there are plenty of people out there that prey on the ignorant to pad their wallets. The reality is- you can learn how to trade forex effectively for absolutely no upfront cost if you put in the research time on the internet. You certainly do not have to spend hundreds or thousands of dollars on courses and systems that only teach you the basics.
Research is your best friend. Look for reviews on material you're interested in before spending a cent. Examine all material with a scrutinizing eye. You should be able to learn and take things away from the material you paid your hard earned money for. There is a very common, unscrupulous tactic for the seller to create a piece to tease enough to get you to buy more of their junk. Their books and videos are less instructional material and more marketing vehicles to sell you more marketing vehicles.
3. Being Seduced By Unrealistic Expectations
Did you know that over $5 trillion a day is now traded through foreign currency exchange? Wouldn't it be great to just get a little taste, just a fraction of that kind of money flowing into your account? Of course it would! Who wouldn't want that? Do you think you can do it with a quick scalping strategy? A few minutes in the market throughout the day should surely be able to put some of that money in your pocket. Right? Not hard at all...
...except for the fact that it is. Every day new traders get involved with forex thinking it will be an easy way to make a few dollars. It's not uncommon for some to use money they can't afford to lose because they NEED to make money now. The cold reality is that forex is a hard discipline to master. The people that succeed do so by dedicating themselves to mastering forex, treating it like they would a business. They work at it and grow over time- just like any other difficult discipline.
There is no quick and easy path to forex success. Anyone promising you quick and easy is probably trying to sell you a product. Trading forex is work and you should be investing several hours of your time into learning. Avoid any product or anyone that suggests otherwise.
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