In the world of Forex trading, for beginners the biggest fear is failure and losing your money. But why do so many newcomers fail?
Everyone knows that the Forex market is good way of earning some money, even enough to give replace your monthly wage. However, most people also understand that if they don‘t get things right, there is a good chance of losing a lot of cash too.
Now although these 2 facts are true, I am often shocked at how many people learn the second one the hard way. These are the type of people that make things really difficult for themselves, just because they were foolish enough to think Forex trading is easy money.
Forex trading for beginners is something that takes time to master, but this kind of thing happens all the time. They usually get into Forex because they knew about someone who was apparently making a ton of money, and decided they wanted a piece of the pie too.
They get this person to share a few tips about how they make money trading, and believe that this will be enough knowledge to start a successful Forex trading career of their own.
They will then jump in and start trading, armed only with a few tips and dreams of Forex success. If good fortune allows it, they won‘t make any money this way, but if misfortune strikes then they could actually make some profit from it.
Hang on! I got that the wrong way round, didn’t I?
No, I didn’t. If this person was to lose from the outset, they would probably realise it is a mistake and stop before they lose any serious money. If, on the other hand, they get lucky and have a run of winning trades straight away, they will think that jumping in without learning the business properly was a good idea.
The longer it takes them to see the flip side of the coin and experience some losses, the more false confidence they will gain in their abilities at Forex trading. For beginners, this is a common mistake, and they will soon start to take bigger risks.
When their first loss inevitably rolls in, they are devastated. They will not only lose money, but also their ego will be hurt.
But everyone has an occasional losing trade, right? And what better way to nurse a bruised ego than to make back that loss on the next trade, and more. The problem here is that a losing streak can last just as long as a winning one.
The problem gets worse when they are desperately chasing losing trades, and they take even bigger and bigger risks, hoping that just one big win will get them back in front. Before they realise it, their trading account is empty and their dreams are in tatters.
So much for Forex trading for beginners being easy!
So, let’s look at the mistakes they made:
1) They jumped right in without learning the trading business properly.
2) They had no trading system in place, and were lost when a losing patch came about.
3) They chased losses. Any trading system you use should make sure that you never chase your losses in Forex trading.
For beginners, it is vital that you take the time to learn the trading business properly before you begin !