Forex trading is profitable some times but not always, There are tons of people who fail at forex trading, This article covers 2 major reasons why people fail at forex trading.
1 - Most people treat Forex Trading as a get rich quick scheme.
This means they are not willing to invest time, energy nor money to be good or to improve their trading skills. They believe that with a few bucks, they open an account and by using a high leverage, they are going to make a fortune in no time. They couldn't be more wrong. The leverage is a good thing for a trader when used with caution. But these people use it at a very high limit and this will end with their millionaire dream really quick.
2 - Most people expect to have great returns in a short period of time.
If you treat Forex like a business, you know this isn't the way things work. There are many factors that contribute to people think this way. One of them is again the high leverage traders use. You shouldn't use a high leverage because you face the high risk of losing your entire account in a couple of trades. Be wise and trade smaller lots. When people think about having great returns in a short period of time they are thinking about day trading.
Well, I'm not going to say that day trading isn't possible; but I'll say that only the more experienced traders make profits from it. This is because, and this is another thing that is always focused when people talk about forex trading, there are no commission costs like in other financial markets.
This is not absolutely true. It's true there aren't any commissions charged but you are charged with the spread. The spread is the difference between the bid and the ask and depends on the currency pair you are trading. If you want to day trade, you'll have to trade several times a day, which means that you will pay the spread several times a day.
Most beginners don't realize they are actually losing money because they don't count with this cost. With day trading, you also need volatility. And volatility is more likely to appear in certain time frames. Volatility isn't always there and you need to develop a strategy that counts with this factor.
Article Source: http://EzineArticles.com/?expert=John_S_Baker
1 - Most people treat Forex Trading as a get rich quick scheme.
This means they are not willing to invest time, energy nor money to be good or to improve their trading skills. They believe that with a few bucks, they open an account and by using a high leverage, they are going to make a fortune in no time. They couldn't be more wrong. The leverage is a good thing for a trader when used with caution. But these people use it at a very high limit and this will end with their millionaire dream really quick.
2 - Most people expect to have great returns in a short period of time.
If you treat Forex like a business, you know this isn't the way things work. There are many factors that contribute to people think this way. One of them is again the high leverage traders use. You shouldn't use a high leverage because you face the high risk of losing your entire account in a couple of trades. Be wise and trade smaller lots. When people think about having great returns in a short period of time they are thinking about day trading.
Well, I'm not going to say that day trading isn't possible; but I'll say that only the more experienced traders make profits from it. This is because, and this is another thing that is always focused when people talk about forex trading, there are no commission costs like in other financial markets.
This is not absolutely true. It's true there aren't any commissions charged but you are charged with the spread. The spread is the difference between the bid and the ask and depends on the currency pair you are trading. If you want to day trade, you'll have to trade several times a day, which means that you will pay the spread several times a day.
Most beginners don't realize they are actually losing money because they don't count with this cost. With day trading, you also need volatility. And volatility is more likely to appear in certain time frames. Volatility isn't always there and you need to develop a strategy that counts with this factor.
Article Source: http://EzineArticles.com/?expert=John_S_Baker
No comments:
Post a Comment