In the world of Forex trading, for beginners the biggest fear is failure and losing your money. Question is, just why do so many new traders struggle to succeed?
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 will try to get as much information out of this person as they can so they can follow suit themselves, and start to make money from Forex without properly studying it.
So they start trading with just a little real knowledge, and dreams of making some big money. If they are lucky, then their first few trades will be losers. But if they are unlucky, then they might actually make some money.
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 they actually get some beginners luck, and win from their first few trades, it only confirms to them that they were right to jump in and start trading.
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.
Sooner or later they will experience a loss, and this will be crushing. They will not only lose money, but also their ego will be hurt.
But don’t all traders have some losing trades? 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.
After a few losses they will start making riskier trades to try and make their money back, desperately chasing their losses and hoping for a big win. They then soon find themselves with an empty trading balance, and their dreams of easy money up in smoke.
So much for Forex trading for beginners being easy!
So, let’s look at the mistakes they made:
1) They started trading without taking the time to learn how things work first.
2) They had no trading system in place, and were lost when a losing patch came about.
3) They chased losses. When adopting a trading system, you will find that it is never a good idea to chase your losses in Forex trading.
For beginners, the important thing is to start learning the basics and build up a solid foundation of trading knowledge from there.
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