Trading the Forex market.
In my experience of trading any market, I find most systems out there are horrific.
They make promises they can't keep, tell you how much money they're making, while you are struggling to figure out
why it's not working for you. Trust me, I've been there and done that, and after countless hours of hard study and
a few blown up accounts, here is my conclusion.
Misconception #1. Multiple indicators.
All too often, I have seen traders that plot tons
of indicators on their charts. MACD, Detrend, 15 moving averages, Volume, Money flow, Dynamic range, Bollingers, Parabolic's,
Point and figure, and bunch of other indicators you probably have never heard of, all plotted on about 15 monitors! An exaggeration
of course but I think you get my point.
The main problem
with indicators in general is that they lag. sometime "I wonder," if the larger traders purposely create them just
to cause smaller traders to lose. Why would they do this? Because they make money off of your loss. One can only guess if
there is any truth in this, but it does make me wonder.
Misconception #2. Multiple currencies.
Forex allows you to trade multiple currencies. Each seem to behave in their own personal
way. Some are more volatile, while others like the EUR/USD tend to be more steady. Most traders, (especially noobies) tend
to believe that since there are so many currencies available, watching as many as you can at once will make you more money.
Wrong! It only takes a few pips a day to build a decent portfolio, and this can be done by watching just one currency pair.
I'm sure most of you have heard the trading cliche, "paralysis from analysis." Not only will this happen using
tons of lagging indicators, but it will also happen watching many currency pairs at one time.
Misconception #3. Making a living right
away.
In very rare cases, an account
can be built very quickly. In fact, one of our contributers built a very large account in one year on just 250 bucks. Normally,
the chances of this happening is almost like winning the pick six on a lazy afternoon. 20 pips a a day is indeed very
possible, but so many people tend to trade with standard lot sizes on a tiny account, yelling "GO BABY GO! YES! YES!
NOOOOOOOOO! #*#%#!!!!!"
Try to keep your expectations
low. Don't believe everything you hear, and never compare yourself with another trader. If you hear of someone shouting
out, "I MADE 1450 PIPS THIS WEEK!" beware. If you plan to investigate it, do yourself a favor and
proceed with caution. There are times when these claims are genuine, but in my experience, It is either be a marketing ploy
or a plain old fluke. Guard your heart from greed as it is the number one distraction in this business. A safer way to go
is to shoot for a 5 to 15% monthly gain, and calculate what your risk would be to achieve it. This may sound like wimpy
gains for most, but in the long term, it's quite substantial. If day trading is taking up too much time to do this, consider
position trading.
Misconception #4. Must learn everything.
This is another mistake, but it can also be beneficial as long as you don't let
all of your education interfere with what you find works for you. The Forex world is almost cult like. As soon as a new system
comes out on the market, traders are foaming at the mouth to get their hands on it because this could be "The answer!"
The secret to a trader's success may surprise you. It's not the latest trading system or indicator, but shear patience,
and proper money management. Below are some helpful tips that you may find beneficial.
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